[Market Review].
The US dollar index oscillated downward. The prospect of a massive US stimulus package drove market optimism and weakened demand for the US dollar. In this context, although the U.S. initial jobless claims were slightly better than expected, and housing starts data also showed optimism, but also failed to reverse the decline of the U.S. index. The U.S. index slid all the way from 90.97 to near 90 this week.
Gold jumped $40. The market expects the U.S. to announce more fiscal stimulus measures soon, and the dollar weakened continuously, supporting gold. Gold rose $40 this week and is now trading near $1860.
Silver jumped 5.3%. Similarly, the prospect of a weaker dollar and low interest rates boosted silver’s appeal, with asset holdings in silver ETFs rising the most in 17 months and silver prices surging 5.3% this week.
The ECB left interest rates unchanged. On non-US currencies. The ECB kept interest rates steady and promised to provide more support to the economy if necessary. Despite ECB President Lagarde’s warning that the new crown Epidemic has re-emerged. Long-term epidemic restrictions that could challenge the economic outlook for the eurozone. However, market reaction to Lagarde’s comments was muted and market participants continued to focus on the global economic outlook that appears to be improving. Against the backdrop of continued dollar weakness, the euro still saw a big gain against the dollar this week, surging by a total of more than 80 points.
The British pound jumped more than 140 points. Compared to the euro, the pound’s rally seems more pronounced. The pound jumped more than 140 points against the dollar during the week. The UK is vaccinating faster than most EU countries. Bank of England Governor Bailey expects the British economy to see a strong recovery as the country continues to vaccinate people against the new crown. This has supported the pound. However, we must not ignore the impact of the epidemic. The British government has warned that it is too early to consider easing restrictions against the epidemic and that a third round of the blockade is bound to last for a long Time.
U.S. oil gains slowed. Moving on to the oil market. U.S. crude inventories unexpectedly increased, reigniting demand concerns triggered by the New crown outbreak. However, hopes of a U.S. economic stimulus package limited the downside for oil prices. U.S. oil rose to near $53.80 at one point this week before giving back some of its gains.
Bitcoin fell below the 30,000 mark. Finally, a look at bitcoin. Earlier in the day, bitcoin once topped $40,000. But bitcoin has seen a big drop this week, and has now fallen below the $30,000 mark. Some investors say that this drop, could be a natural adjustment.
[Risk Warning].
Euro: Slow progress on vaccinations Euro fears to fall below 1.20
Toronto TD Bank’s head of global foreign exchange strategy said the vaccination race, may be a major uncertainty driving the G10 currency trend this year. By the end of April, the U.S. monthly vaccination rate will reach the most effective point of 15%, and Germany seems to be able to reach a similar pace, but other eurozone countries will lag significantly behind. This is one reason why the bank is bearish on the EURUSD, recommending shorting Europe and the US at 1.22 and expecting the pair to fall below 1.20 around next month.
British pound: multiple positive factors stacked up British pound up to 1.3745
The pound has been boosted by the fact that a deal has been reached to leave the European Union, the Bank of England’s implementation of negative interest rates is expected to cool, and the pace of vaccinations in the U.K. The FXSTREET financial website points out that the pound is currently hovering above 1.37 against the U.S. dollar. 4-hour chart shows that technical indicators lost bullish momentum, but still within positive levels, short-term attention can be paid to 1.3745; if there is a pullback, you can Keep an eye on 1.3670.
US dollar: US easing environment expected to continue US dollar will be dragged down
Dutch International Group strategists said that although the eurozone economy will not perform stronger than the United States this year, the ECB is still far from policy normalization, but the bank still believes that the dollar bearish atmosphere will dominate the market. U.S. ultra-loose monetary policy and the post-epidemic era of global recovery hopes, will drag on the dollar.
Key Outlooks
Saturday 00:00 EIA Crude Oil inventories may increase
EIA crude oil inventories released last week decreased by 3.248 million barrels, decreasing for five consecutive weeks. The financial blog Zero Hedge commented that U.S. crude oil inventories fell slightly more than expected, but product inventories showed a significant increase. In line with seasonal trends, gasoline demand fell again, but this was much more severe than last year. With oil prices back above $50 and the rig count increasing, it was previously expected that U.S. oil production would begin to rise, but the data proved otherwise.
Yesterday, API crude oil inventories were released, increasing by 2.562 million barrels, more than expected. Based on past experience, API inventory data and EIA inventory data have a relatively strong positive correlation, so EIA crude oil inventories could also increase.
Even so it is still necessary to pay attention to the current market expectation that the US EIA crude oil inventory to the week of January 15 or decrease by 1.167 million barrels, if the published data exceeds expectations, oil prices may short fall; if the inventory data is less than expected, oil prices are expected to strengthen.
Oil prices remain supported by expectations of a U.S. stimulus program launch. In addition, cold weather to stimulate energy demand, Saudi Arabia’s unilateral production cuts and a weaker dollar also boosted the market. However, it should be noted that the implementation rate of OPEC+ production cuts declined in December and the worsening epidemic also weighed on crude oil demand. For now, the long and short factors affecting oil prices are still in play.
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