[Market Review]
The finger of beauty lifts after it is crushed. Earlier, the DOLLAR index hit 89.42, its lowest level since April 17, 2018. However, as U.S. stocks took a tumble, the dollar index reversed course, clawing back some of its previous losses, but remained broadly weak on a day of record low U.S. interest rates, a huge U.S. deficit and a belief that a rebound in world trade would push non-dollar currencies higher.
Gold once broke through the 1940 dollar barrier. Gold, fresh from its biggest annual gain in a decade, pushed through the $1940 barrier to an eight-week high, buoyed by falling us real yields and a weaker dollar. The new British strain is followed by a more infectious variant in New York, the US. Strategists expect the surge in COVID-19 infections, along with the emergence of the mutant strain, to lead to a sharp increase in economic stimulus measures in the US, which in turn will weigh on the dollar and, in turn, push gold higher.
Silver rose nearly 2.4%. Compared with gold, silver also seems to have risen as much. Silver rose as high as $27.50 on the day from $26.4 before retreating. On a one-day basis, silver was generally up, up nearly 2.4%.
The British again tightened the blockade. In Britain, Prime Minister Boris Johnson announced a lockdown across England from Monday night until mid-February. Meanwhile, The UK has raised its alert level to phase 5, its highest level. This is the strictest lockdown since England first closed the city last March, foreign media said. As a result, the pound fell sharply against the dollar more than 160 points.
The euro rose and then fell. Take the euro. Against the backdrop of a weaker dollar, the euro briefly touched 1.2309 against the dollar, almost touching its December 30 high of 1.2310, its highest level since 2018. However, the pair subsequently failed to stabilize their gains and have since retreated to around 1.2260.
Russia has proposed an increase in production. Finally, the oil market. OPEC+ met last night to discuss production plans for February, but divisions are emerging among producers that have just begun to scale back their output cuts. Most OPEC+ members are opposed to a further increase in Production in February as the epidemic blockade has crimped demand, but Russia and Kazakhstan want to increase production, according to sources. Deputy Prime Minister Novak Has proposed cutting output by another 500,000 barrels a day. The news of Russia’s proposed increase sent US oil down by as much as 5 per cent. As no agreement was reached, the meeting will continue this evening.
▼ Bond market
Overnight, Chinese 10-year yields rose 1.87 per cent, US 10-year yields rose 0.34 per cent and US one-month yields fell 18.46 per cent.
▼ Stock market
U.S. stocks closed down in unison, with the S&P 500 down 1.48%, the Nasdaq off 1.47% and the Dow off 1.25%. By this morning, The Chinese stock market had opened green, with the Shanghai Composite index down 0.31 percent, the Chinext index down 0.91 percent and the Hang Seng index in Hong Kong down 0.7 percent.
[Risk Warning]
Sterling: Sterling or a short – term correction in the middle of the 1.40
Societe Generale pointed out that the GBP has reached the target of 1.37-1.3740 against the dollar, which is the trend line linking the peak in September 2018 and December 2019. However, an initial pullback cannot be ruled out, with 1.3135 likely to be a resistance level for the pullback, which could then continue upwards, with the next target likely being 1.4030.
Australian dollar: Australian dollar may rise to 0.80 as outbreak in Australia stabilizes
Some analysts pointed out that the stabilization of the epidemic in Australia and the recovery of the Asia-Pacific economy, which was the first, also provided strong support for the Australian dollar. The RBA decided to extend its bond buying programme for six months and buy a further $100 billion of bonds. This will help the Australian economy recover. The Australian dollar could rise to 0.80 to the US dollar by 2021.
Gold: Gold is expected to continue its rally if central banks around the world keep it loose
In 2021, gold prices will continue to be driven by loose conditions, and will get a boost if central banks around the world don’t think, or expect, to tighten monetary policy. Second, it depends on the speed of the economic recovery, if not as expected, gold prices continue to strengthen. If the weak dollar does not change, gold prices can hardly keep falling.
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