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Market Recap January 2021



Welcome to our look back at January 2021 and what happened in forex markets around the world.

The main market drivers were quite varied, but quite predictable, this month with the COVID-19 Lockdowns, COVID-19 Stimulus Packages, COVID-19 Vaccines, the new US Government, US/China Trade Relations, and Brexit.

Regarding global trade issues with China, the world has been waiting for the new Biden administration to get up-and-running as the only way forward to resolving these.  An alliance between all major industrialised nations (hopefully led by the US) is really the only way to stand up to China.  Any news on this from will have major impact on Commodities, Currencies and Equities.

Crude Oil

Both Brent Crude (UK Oil) and West Texas Intermediate (US Oil) have rebounded since the disastrous collapse of the market at the end of October but the petrochemical industry has made it clear that prices still are not high enough as they had seen in the past.

WTI is now in a range from $51.60 to $53.90 per barrel and Brent Crude is ranging from $54.50 to $56.40 per barrel with a spike to $57.30 in the middle of the month.

The main driver of price in January, and moving into the next few months, will be COVID-19 lockdowns and travel bans which are restricting the use of automobiles and jet airplanes which, of course, require fuel.  Lower demand equates to lower price.

Keep an eye on OPEC as, in the January meetings, production cuts were discussed for February and March which will help price.  Lower supply equates to higher price but we need to see if oil producing nations follow through with production cuts.

As with everything, short term price movements are being created by both negative and positive news on COVID-19 vaccines and these fluctuations will continue for months to come.

As well, the Biden administration has pledged to spend roughly $2 trillion on green energy which will reduce the demand for crude over the next several years.

Jan Blog US Oil

US Equities

All the US Indices have far surpassed their pre-COVID levels based on optimism of investors, confidence from the US Federal Reserve, and positive reactions from the US government by their massive stimulus packages.  However, problems with US/China trade relations, vaccine distribution, new strains of COVID-19, and confusion over the size of the next stimulus package have caused much volatility in the last few days of the month.

Clarification and better news on any of the above items will be positive for the US Indices like the S&P 500, the NASDAQ and the Dow Jones Industrial Average.

Janet Yellen — the new US Treasury Secretary — has just stated that “There is a huge amount of pain in our economy right now”.  Investors will be listening for more.

Jan Blog US Equities

European Equities

Despite the highs of the US Equities, the European Stock Indices have been falling over fears of the new strains of COVID-19, economic woes, political instability, and general over-valuation of their component corporations.

Quite simply, we will need to see better news on the current COVID-19 lockdowns, vaccine production and distribution, and various financial crises in countries such as Italy.

Jan Blog European Equities

UK Equities

The FTSE 100 has yet to recover to pre-COVID levels in the 7000’s and is still falling into the low 6000’s and is currently at support from the end of last year.

Huge problems with UK COVID-19 lockdowns, lost productivity, and uncertainty with the London-based banking sector, among other factors, have affected UK companies.  This may be changing soon, however (see GBP below). 

Also, considering that most of the companies on the FTSE 100 earn their income from foreign offices and sources, any increase in GBP negatively affects the market cap of each company.

Jan Blog UK Equities


The USD slide for most of last year was based on the idea of a new Democratic government along with prospective COVID-19 stimulus packages planned.  In January we have seen a market correction with USD strength against EUR, CHF, and JPY.  It is still slightly weaker against AUD and NZD and almost neutral overall against CAD.  

The only exception is GBPUSD where we see USD weakness but that has more to do with GBP strength.

If the Biden government can get the next $1.9 trillion stimulus package passed, we will see the USD fall, but congress will likely be negotiating a lower number into February.

Jan Blog USD


GBP strength this month has been based on the Brexit situation finally being resolved.  Moving forward, with better news on Gross Domestic Product, and the ability of London to remain the major financial centre of Europe post-Brexit, will have a positive effect on the Pound.

Currently, the COVID-19 situation remains bad in the UK but they are slightly ahead of other major economies regarding vaccines and the market is betting on an improving economy to keep the Pound strong.

For the above reasons we see a bearish situation on EURGBP considering the Euro may suffer from vaccine delivery problems and instability in the Italian government.

Jan Blog GBP


XAUUSD has fallen from highs at the beginning of January and is now ranging between $1833 and $1875.

As we all know, price action in Gold is always affected by geo-political events and the buying and selling of this precious metal by central banks.

Any positive news on US/China trade relations will bring the price down with negative news doing the opposite.  Of course, any unexpected events in hot-spots, such as Iran and the global nuclear deal, will drive the price of gold higher.

Jan Blog Gold


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