[Market Review].
The Fed maintained its highly accommodative rhetoric. The Federal Reserve announced its first interest rate resolution in 2021, keeping the federal funds rate unchanged at 0%-0.25%, in line with market expectations. On the bond purchase guidelines, the Fed said it continues the current pace of asset purchases until substantial progress is made on the target, and will no longer provide regular one-month repo operations after February 9. In addition, Fed Chairman Jerome Powell warned that the pace of the U.S. economic recovery has slowed, further emphasizing that the U.S. economy is still a “long way” from achieving employment and Inflation targets, and it is too early to discuss easing policy withdrawal. After the resolution was announced, the dollar index first fell and then rose, Powell began to speak after further expansion.
Gold broke below $1840. After the Fed’s resolution was announced, gold surged higher and fell back down, further expanding to 0.5% after Powell’s speech, falling to near $1841. By this morning, gold prices were even below the $1840 mark.
Silver is under pressure again. The trend in silver is roughly similar to that of gold. Earlier, silver prices once as low as $24.67, then ushered in a rebound, but then again under pressure to the downside, currently at $25 a narrow range of oscillation.
The euro oscillated to the downside. On the non-U.S. currencies. The euro oscillated downward against the dollar, hitting a low of 1.2058. ECB policymakers stressed that a rate cut is still a viable option. Money markets have now brought forward bets on an ECB rate cut of 5 basis points to July, after September. In addition, the ECB management committee Nott pointed out that if the euro strength threatens the inflation outlook, then it will become the ECB’s top priority to address. If necessary, the ECB has the tools to deal with the appreciation of the euro. The euro fell against the dollar once on the news.
The British pound retreated to higher levels. Then look at the British pound. The British pound also came under pressure against the dollar during the day and is now hovering around 1.3670. British Prime Minister Johnson said that the anti-Epidemic blockade measures will continue until at least March 8. Investors remain concerned about the impact of the outbreak and the embargo measures on the U.K. economy.
U.S. oil retraced its gains. Finally, coming to the oil market, EIA Crude Oil inventories recorded a decrease of almost 10 million barrels, supporting oil prices. U.S. oil surged as high as $53.27 per barrel. However, weakness in the U.S. stock market caused oil prices to retrace most of their gains.
[Risk Warning
Gold: Commodity bull market is coming Gold prices are expected to break through 2000
Despite the recent declining performance of gold prices, but Saxo Bank’s chief investment officer said that 2021 will be the beginning of the commodity bull market, and this is the seventh commodity bull market in the past 225 years, gold and silver prices will rise, gold prices are expected to break through $ 2,000 ounces this year.
Australian Federal Reserve: institutions look ahead to the Australian Federal Reserve policy is expected to cut the size of bond purchases
Capital Macro believes that the Australian Federal Reserve will present more optimistic economic growth, inflation and job market expectations at its regular meeting in February, although the Fed is expected to continue to release a dovish stance. Even so, the sharp recovery in the job market will make the Australian Fed cut its asset purchase program in April. The market is widely believed that the bank will start in April, the weekly asset purchases from the current 5 billion Australian dollars to less than 2 billion Australian dollars.
Euro: economic recovery or delayed euro fears dragged
Financial website Forexlive commented that stricter blockade measures have depressed consumer confidence, with Germany‘s Gfk consumer confidence index recording -15.6 in February, the fourth consecutive monthly decline and the lowest since June last year. German market research firm Gfk said the impact of the closure of most retail sectors on consumers’ propensity to buy is as severe as it was during the first blockade last spring. In other words, the European economic recovery is likely to be delayed. This will depress the euro.
[Key Outlook].
21:30 U.S. Q4 GDP growth expected to decline
Next, let’s focus on the fourth quarter GDP data to be released by the US. The data recorded 33.1% in the third quarter of last year. Some commentators say that the U.S. economy recorded the largest increase since records began in 1947 because the government came up with more than $3 trillion worth of relief measures to boost consumer spending, but the damage caused by the continued spread of the epidemic may take a year or more to make up. U.S. GDP growth will be significantly lower in the fourth quarter.
The market expects the preliminary annualized quarterly value of U.S. real GDP in the fourth quarter to be 4%. If the published value is better than expected, it may be positive for the dollar; if not, it will be negative for the dollar.
It can be seen through expectations that the U.S. economy will grow at a slower pace in the fourth quarter, but the market has already digested this expectation. In addition, the annual rate of core PCE price index and initial jobless claims will also be released at the same Time. If these groups of data pull back sharply, the dollar index may come under pressure.
21:30 U.S. initial claims may remain high
Next, let’s look at the initial jobless claims that will be released in the US. In the last two weeks, the number of initial claims released in the United States has increased, with last week’s release of 900,000. Some agencies commented that the number is still at a high level because of the epidemic sweeping the US. The epidemic is disrupting the operations of businesses such as restaurants, gyms and other places where people gather, reducing the hours of many workers and driving up the number of unemployed.
Currently, the market expects that the U.S. initial jobless claims for the week to January 23 will be 875,000. If the published value is much higher than expected, the dollar index may be under pressure; conversely, if the published value is less than expected, the dollar index may be stronger.
Need to be vigilant, the current number of confirmed new crowns in the U.S. did not significantly reduce, which may push up the number of initial jobless claims, and then depress the dollar index.
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