[Market Review].
The U.S. bailout plan is at risk of being delayed. Regarding the U.S. fiscal stimulus, U.S. Senate Republican Leader Mitch McConnell said that Biden‘s bailout plan did not meet the expected goals. The current stimulus plan does not seem to be advancing that smoothly. However, U.S. Senate Majority Leader Schumer said he will try to pass the stimulus plan within a month and a half. Affected by the risk of delay in the bailout plan, the dollar index oscillated upward within the day. Yellen‘s nomination for U.S. Treasury Secretary has now received enough votes in the Senate to pass. Yellen will be sworn in as U.S. Treasury Secretary this evening. The dust settles on Yellen’s inauguration as U.S. Treasury Secretary, which may help the implementation of the economic stimulus.
Gold is basically flat. Next, let’s focus on gold. Gold was essentially flat, closing at $1,855.36 an ounce. Earlier in the day, gold had slipped $20 from its intraday high to $1,847.03 an ounce. A higher dollar and the risk of a delay in the bailout plan weighed on gold. However, the continuous decline in U.S. bond yields supported gold prices again.
Silver rose and then fell. The trend of silver is roughly similar to that of gold. Earlier, silver prices touched $25.74 per ounce on the upside before coming under significant pressure. However, after dropping to $25.14, it saw a small rebound and is now oscillating sideways around the $25.3 line.
The euro oscillated to the downside. In non-U.S. currencies, the U.S. dollar strengthened, the euro against the U.S. dollar shocks downward during the day, hitting a low of 1.2116. Some analysts pointed out that German business confidence fell to a six-month low in January. The German economy is expected to stagnate in the first quarter. And the European Central Bank President Lagarde said that the ECB will participate in the market “for the long term” to ensure that there is enough money to deal with the new crown Epidemic. The European economy is poor, also dragged the euro.
The British pound is difficult to maintain the uptrend. Let’s look at the British pound again. The British new crown vaccination continues to advance, providing support for the pound. However, the pound also struggled to sustain its uptrend due to the rally in the dollar. The pound fell more than 50 points from its intraday high against the dollar.
U.S. oil surged 1%. Finally, to focus on the oil market. Iraq pledged to make production cuts in January and February to compensate for production exceeding OPEC+ quotas last year. In addition, the Libyan Oil Facilities Guard halted some of the country’s Crude Oil exports due to a pay dispute. Meanwhile, sources said that seaborne exports of Russian Urals crude oil will fall by about 20% in February. Market expectations of a tightening global supply offset concerns that a poor launch of the new crown vaccine would dampen demand. U.S. oil gained 1% intraday.
[Risk Warning].
Sterling: A mix of long and short factors Sterling eyes 1.3725
For the pound, the U.K. may still be a long way from unsealing, which is potentially positive; while the Bank of England governor last week to suppress negative interest rate expectations and the U.K. vaccination progress faster than other countries, is a positive factor. At the moment, multiple short and long factors are swaying the movement of the pound. UOB technical analysis points out that the pound needs to stay above 1.3725 against the dollar in order to rise to 1.38 in the coming weeks.
Euro: Doubts remain about reducing bond purchases TD recommends shorting Europe and the US
TD Securities said the economic recovery strengthens further later this year and discussions about cutting back on bond purchases will be difficult to avoid. The prospect of rising U.S. real interest rates and risk appetite turbulence triggered by Fed tapering doubts will open up opportunities to short EURUSD. TD recommends shorting EURUSD at 1.2170 with a target of 1.2050 and a stop loss of 1.2325.
Canadian dollar: U.S. stimulus expectations add up Goldman Sachs recommends going long CAD
Goldman Sachs recommends shorting USDCAD. More U.S. fiscal stimulus is expected to boost the Canadian dollar and other crude oil exporters’ currencies. In addition, while the CBC kept its current monetary policy stance unchanged, the statement implied that future bond purchases may be cut if the economy and Inflation are broadly in line or stronger than expected. This also supported the Canadian dollar to some extent.
Key Forecast
15:00 UK unemployment rate expected to rise
First, let’s take a look at the UK’s ILO unemployment rate. Unemployment figures released in recent months have steadily risen, with the figure released last month recording 4.9% and the number of redundancies touching a record high. The Office for National Statistics also said that a record 370,000 people were laid off from UK businesses during August-October.
Currently, the market expects the U.K. November three-month ILO unemployment rate of 5.1%, if the published value is greater than expected, or negative pound; conversely, it is positive for the pound.
In addition, the UK December unemployment rate, December unemployment claims will be released at the same Time. Please consider the impact of these data groups on the market.
Wednesday 05:30 API crude oil inventories may increase
Next, let’s focus on API crude oil inventories. Last week, API reported that US crude oil inventories increased by 2.562 million barrels. The subsequent release of EIA crude oil inventories was an increase of 4,351,000 barrels, both of which exceeded expectations.
By the end of the week, the market expects that U.S. API crude oil inventories may increase by 603,000 barrels for the week ending Jan. 22. If the published value is larger than expected, oil prices may come under pressure; conversely, oil prices may rise.
It is important to keep an eye on the current situation because the demand for crude oil will be limited as the epidemic continues to worsen. Also a rise in oil prices above $50 a barrel will spur U.S. shale oil producers to increase crude oil production, which is not good for oil prices.
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