Can gold bulls party as risk comes in?

“Global Overview

  1. The ECB’s emergency bond-buying has fallen to its lowest level.

The ECB’s bond purchases have helped stabilize markets as the neo-crown epidemic begins to devastate European economies. The latest data show that the ECB in last week 5 days, only to buy 11 billion euros of bonds, which is the lowest amount since the start of the project in March 1.35 trillion, indicating that as the region’s debt markets rise, the implementation of more stimulus momentum is weakening. In addition, the ECB intends to launch a new monetary stimulus plan at the next policy meeting, which gives the market a lot of room for thought.

  1. the EU is ready to issue social bonds again

After the great success of the EU’s first social bond issue, the organisation is exploring the possibility of issuing a second tranche of bonds. The EU has sought offers from banks and expects to issue such bonds as early as next week. Some analysts say demand may not reach last month’s level, but it will still be well above 150 billion euros.The common bond issued in October was a landmark EU epidemic-prevention operation and heralded the arrival of an important safe-haven asset, while demand for Eurobonds hit an all-time high when subscriptions totaled more than 233 billion euros.

3.Apple to release first homegrown computer chip

Just Apple’s official announcement, confirmed that will be held on November 11, the fourth online conference on the content of this conference, the highest concern may be Apple’s first self-developed computer chip. Apple’s self-developed chip will use ARM architecture, with higher scalability and stronger nerve engine, which also symbolizes Apple’s 15 years of chip cooperation with Intel is about to dissolve, although Apple did not disclose the specific release of what products, but it is widely believed that a high probability is the new Mac.

[Market Review]

The dollar index is falling off its highs. The dollar index has fallen from a one-month high to near the 94 level, and the market sees an overall positive for the dollar regardless of who wins the election. In addition, some analysts point out that the Federal Reserve will hold its November monetary policy meeting this week and is expected to remain on hold and that it is unlikely that U.S. policymakers will announce more stimulus measures in the near future.

Gold surged $17. The dollar index continued to fall and gold saw a recovery, with the price of gold surging $17 during the day. Analysts believe that there will be no massive buying in the gold market until the outcome of the vote is clear. However, some strategists say that gold’s long-term performance remains bullish because a new round of stimulus projects will come sooner or later, when the dollar will come under pressure and gold prices will be boosted.

Silver rose nearly 3%. Silver followed gold’s rally, swinging up during the day to as high as $24.14 an ounce, a gain of nearly 3%.

The euro hit a new five-week low. Non-US currencies. The euro hit a new five-week low against the dollar, with markets worried about the economic outlook in the wake of the second outbreak of the European epidemic, which continued to run against the G10 currency. Analysts also pointed out that the European Central Bank’s policy decision last week paved the way for further easing action in December, which means the euro will continue to face downward pressure in the aftermath.

FXSTREET view: the EURUSD bias to the downside. So what’s next for the EUR? FXSTREET notes that on the 4-hour chart, the 20-day moving average maintains a sharp bearish slope and is well below the larger moving averages. Overall, the pair remains biased to the downside. For now we can look down at 1.1620, 1.1575 and 1.1530; in case of a rebound, we can keep an eye on 1.1680, 1.1720 and 1.1770.

Sterling continues to weaken. Coming back to the pound, the pound hit a three-and-a-half-week low against the dollar and is now down a bit, with the second blockade taking a toll on the British economy. The former chief of staff at the UK Cabinet Office said that the four-week restrictions on the epidemic could cause the UK’s GDP to fall by 5% in the fourth quarter. In addition, the chief economist at Nomura International expects that the Bank of England may accelerate the pace of its weekly quantitative easing, which will be more than £100 billion if the bank hopes to continue buying for a considerable period of time. If that’s the case, the pound fears downside risks.

US oil rallies strongly. In the oil market, US oil fell 5% shortly after the open, falling below $34 a barrel to as low as $33.62, then rebounded, and after finishing the afternoon session sideways, started to punch higher in the late afternoon, and after Russia came out to consider postponing the policy of scaling back OPEC+ production cuts, oil prices erased all the losses of the day, and finally closed up 3.73%.

▼On the bond market

Overnight, the yield on China’s 10-year government bonds rose by 0.16%, while the yield on US 10-year government bonds fell by 0.38% and the yield on US 3-month government bonds fell by 0.42%.

▼Stock Market.

U.S. stocks closed all together, the S&P 500 index rose 1.23%, the Nasdaq rose 0.42%, the Dow Jones index rose 1.6%; to this morning, the Chinese stock market opened in the red, the Shanghai Composite Index rose 0.46%, the ChiNext index rose 0.45%, Hong Kong’s Hang Seng index rose 0.94%.

[Risk Alert]

Euro risk events stack up or can short the euro

Bank of America analysts say macroeconomic conditions, technical analysis, positions and fundamental risks all contribute to shorting the EURUSD. The proximity of the U.S. elections increases the risk of a contested election result. According to the agency, potential social and political tensions, economic policy uncertainty and the fact that 20 million Americans still need relief policies will be risk events. To hedge against these risks, Wells Fargo is inclined to short the euro.

Yen risk aversion lingers US-Japan or downside

Hedge funds ditched the yen’s overall bearish bias for the first time in two months, with positions becoming more balanced. Citi’s head of global foreign exchange analysis said the market will breathe a sigh of relief when the U.S. election results come in. But the broader direction in the coming weeks could depend on the impact of the new crown, so the agency believes investors should proceed with caution. If the election result is disputed, which would be the most risk adverse outcome, the yen will rise.

Canadian Dollar DAM recommends shorting US-Canada target at 1.26

Morgan Stanley new USD/CAD short position, entry point 1.3257, target 1.26, stop loss set at 1.34. The bank analysts expect that risk demand will pick up after the U.S. election, while the U.S. policy outlook will also be clearer, while taking into account Canada’s fiscal stimulus will support the country’s economic recovery.

[Key Outlook]

11:30 Australian Federal Reserve fears rate cut

At noon today, the Australian Federal Reserve will announce its interest rate decision. At the October resolution, the fed rate was left unchanged. The policy statement indicates that the economic recovery is likely to be neither balanced nor flat. Fiscal and monetary policy support will be needed for some time. The Fed said that it would maintain a highly accommodative monetary policy if needed.

By this month, a combination of comments from Australian Fed officials in recent weeks, particularly from Australian Fed President Lowe.

Currently, the market expects that the Australian Fed may cut interest rates, while strengthening yield curve control as well as increasing the scale of bond purchases. The market generally believes that the Australian Fed will take an easing policy, you investors need to pay attention to the downside risks of the Australian dollar.

Wednesday 05:30 API crude oil inventories are expected to increase

Tomorrow morning, the US will release API crude oil inventories. Last week, the API report showed that US crude oil inventories increased by 4.577 million barrels, more than expected. This was followed by the release of EIA crude oil inventories, which also increased significantly.

By this week, the market expects that the US API crude oil inventories will increase by 1.964 million barrels in the week to October 30. If the published value is larger than expected, oil prices may come under pressure; otherwise, oil prices may rise.

Recently, oil prices have been suppressed by rising concerns over the new crown epidemic. However, the expectation that OPEC+ may delay the production increase has supported oil prices.

Also of note today are the following data.

15:30 Swiss October CPI monthly rate: previous value 0%, forecast 0%.

23:00 US September factory orders month-on-month: previous value 0.7%, forecast 1%.

Wednesday 07:50 Bank of Japan publishes the minutes of its September monetary policy meeting.