Risk markets were supported higher this week as incoming US Treasury Secretary Janet Yellen assured markets of ongoing fiscal support. The negative sentiment from the sell the fact response to the Biden stimulus package last week was turned around this week as market participants focused once again on the global return to growth narrative. COVID-19 cases in the US and the UK also fell from recent highs supporting positive sentiment. As long as the number of vaccinations continue risk assets should find buyers on any dips in the coming days.

Other key events from the past week

• EUR: Interest Rate Statement, Jan 21. The ECB kept interest rates unchanged as expected and reaffirmed what the market already knew about ECB policy. The only shift was a slight nod to Euro bulls stating that the downside risks are now less pronounced for the eurozone.
• USD: Dollar Index Capped, Jan 18. The 91.00 level capped USD bulls this week as the USD retraced recent losses from the end of 2020. The medium term technical picture still favours USD sellers as long as price remains below 93.00.
• US Oil: Demand hopes, Jan 19. WTI crude futures continued higher this week on news that oil demand is expected to rise again for the second half of 2021.

Key events for the coming week

• AUD: CPI data, Jan 27. Australia’s interest rates are likely to stay at 0.10% for the foreseeable future, but any spike higher in CPI this week will encourage AUDUSD bulls as long as the global synchronised recovery narrative remains.
• USD Interest Rate Statement, Jan 28. Interest rates are expected to be unchanged. However, investors focus will be on the forward guidance and whether future rate hikes will be brought forward from the Fed’s current 2023 projections.
• S&P500: All time highs ahead? Jan 25. Will the S&P500 continue making all time highs supported by both fiscal and monetary stimulus from both Washington and the Federal Reserve this week?