Daily Alert – Wednesday 10th February 2021: Biden’s “think big” stimulus pressures USD

Mark NugentDaily Alert, Feb 2021

Daily Alert – Wednesday 10th February 2021: Biden’s “think big” stimulus pressures USD

US President Joe Biden pushed the USD down on Tuesday as he said, after discussions with the Republicans, that he is able to “think big” on the Covid stimulus plan. Big stimulus equals big inflation equals weak USD.

Monday’s risk-on position fizzled out and by the close risk sentiment was indecisive and has stayed there until the time of writing (1630 GMT).

The GBP was strong on Tuesday so I paired it with the weak USD and went long on GBPUSD. So far, it’s in the money but going sideways. Stop moved to breakeven so no capital at risk. Solid, cautious trading.

Bank of England Governor Bailey is speaking tonight at the Mansion House. There is a chance he may say something to move the markets. Recent rhetoric from the Bank of England has been bullish on the UK economy so a big more of that could underpin the GBP and help my GBPUSD long.

Global equities indices are flat on the week and, for most, floating around all-time highs. GOLD rises on the weak USD. Oil grinds up on positive economic hopes fuelled by vaccinations. The GBP and EUR are strong, and the USD is weak – all as per my bias. The only dark spot is the JPY/commodity currency dynamic which is not working. The JPY is not reflecting sentiment cleanly and the commodity currencies have lost their inverse correlation with the JPY. I’m sure these currencies will sort themselves out in due course.

I’ll be back on Friday.

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