News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Earnings in focus https://t.co/iQZ3NTgriW
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in AUD/JPY are at opposite extremes with 63.58%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/yPYfN7Ik9C
  • Commodities Update: As of 11:00, these are your best and worst performers based on the London trading schedule: Silver: 1.57% Oil - US Crude: 1.01% Gold: 0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/X7kHJDLKkY
  • Forex Update: As of 11:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.46% 🇨🇭CHF: 0.42% 🇦🇺AUD: 0.41% 🇨🇦CAD: 0.29% 🇳🇿NZD: 0.20% 🇯🇵JPY: -0.29% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/NQsgL7dUy5
  • Ever wonder if there are other chart types that can be used for technical analysis? HLOC charts are discussed in the following article as well as their pros and cons. Learn more here: https://t.co/qV3c7a4YR3 https://t.co/Yqu2heS6Wz
  • Indices Update: As of 11:00, these are your best and worst performers based on the London trading schedule: US 500: 0.42% Wall Street: 0.37% Germany 30: 0.19% FTSE 100: 0.14% France 40: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/LCfrU0DwEH
  • France 40 IG Client Sentiment: Our data shows traders are now net-long France 40 for the first time since Dec 22, 2020 when France 40 traded near 5,477.70. A contrarian view of crowd sentiment points to France 40 weakness. https://www.dailyfx.com/sentiment https://t.co/58P7y6uEE0
  • Coming up in 20'. Please join me if you're free by clicking the link below https://t.co/629fFCZnuC
  • 💶 ZEW Economic Sentiment Index (JAN) Actual: 58.3 Previous: 54.4 https://www.dailyfx.com/economic-calendar#2021-01-19
  • 🇩🇪 ZEW Current Conditions (JAN) Actual: -66.4 Expected: -68.5 Previous: -66.5 https://www.dailyfx.com/economic-calendar#2021-01-19
US Dollar, Nasdaq 100, US Rates React to Expected Democrat Blue Wave

US Dollar, Nasdaq 100, US Rates React to Expected Democrat Blue Wave

Justin McQueen, Analyst

US Dollar, Nasdaq 100, US Rates Analysis & News

  • A Democratic Sweep the Most Likely Outcome Amid Georgia Results
  • US 10Y Yield Breaks Psychological 1%
  • Nasdaq 100 Breaks Down Amid Rotation into Value Stocks
  • US Dollar Losses Accelerate

A Democratic Sweep the Most Likely Outcome Amid Georgia Results

The Democrats look set to take full control of Congress with the party on course to win both Georgia seats. As it stands currently, Democrat Raphel Warnock has won the first of two Senates, ousting Republican Kelly Loeffler. Meanwhile, outlets such as Decision Desk have called a victory for Democrat Jon Ossoff over Republican David Perdue. However, with voting not yet completed (scheduled to restart at 1300GMT/0800ET) the race does remain to close to official call. That said, bookmakers look to have called the race with PredictIt showing 96/4 in favour of a Democrat win.

How to Trade the Impact of Politics on Global Financial Markets

How Will Congress Look

Once confirmed that the Democrats have won the runoff elections, the extra two seats would see the Senate split 50-50, giving the Vice-President the deciding vote in the event of a deadlock scenario. The importance of this is that it will pave the way for Biden’s policies to pass through Congress with relative ease, particularly a future fiscal stimulus package.

The Blue Wave Trade

As I noted yesterday, the clearest view of a blue wave scenario would be for US Treasury yields to spike higher amid the rising prospect of more fiscal stimulus. In turn, with a Democrat sweep the most likely outcome, US 10yr yields have broken above the psychological 1% level (highest since March 2020), while the 2s10s curve is now at its steepest since the back-end of 2017. That said, with US 10s hitting 1.02%, this has been a level previously touted to spark sizeable momentum selling in US Treasury Futures.

US 10Y Yield Breaks Psychological 1%

US Dollar, Nasdaq 100, US Rates React to Expected Democrat Blue Wave

Source: Refinitiv

Nasdaq 100 Breaks Down Amid Rotation into Value Stocks

In the equity space, the Nasdaq 100 (-1.8%) is the notable underperformer as markets reprice the possibility of higher corporation tax and regulatory risks, which could see large tech come under greater scrutiny. As such, the rotation trade looks to be back in vogue with value outperforming growth (Russell 2000 +1.8% vs Nasdaq 100 -1.8%). That said, the likelihood of such a material tax increase appears slim, given that this will be a 50-50 Senate, meaning that it would only take one Conservative Democrat to block a tax hike. Alongside this, the current backdrop regarding the global pandemic also reduces the urgency to consider higher taxes in the short-run.

Equities Forecast
Equities Forecast
Recommended by Justin McQueen
Download our fresh Q1 2021 Stock Market Forecast
Get My Guide

Nasdaq 100 Chart: Intra-day Time Frame

US Dollar, Nasdaq 100, US Rates React to Expected Democrat Blue Wave

Source: IG

US Dollar Losses Accelerate

As for FX, the losses on the US Dollar have accelerated, albeit the move has been relatively tame thus far. However, it does embolden the consensus view of a weaker USD, raising the risk a move towards the March 2018 lows situated at 88.58. Alongside this, the high-beta pairs (AUD, NZD) are outperforming as to be expected.

USD Forecast
USD Forecast
Recommended by Justin McQueen
Download our fresh Q1 2021 USD Forecast
Get My Guide

US Dollar Chart: Weekly Time Frame

US Dollar, Nasdaq 100, US Rates React to Expected Democrat Blue Wave

Source: Refinitiv

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES