[Market Review].
The US index was strong, while non-US Crude Oil was lagging. This week, the U.S. dollar index was stronger, while non-U.S. currencies and crude oil were a little less impressive. In addition, Gold also suffered from pressure, but silver unexpectedly surged during the week.
Democrats aggressively pushing stimulus plans. Recent news about the U.S. economic stimulus has not shown substantial progress. Earlier, U.S. Senate Republican Leader Mitch McConnell said that Biden‘s bailout plan did not meet the expected goals. The bailout plan is at risk of being delayed. Later, Senate Majority Leader Schumer said the Senate may use budget tools to pass an Epidemic relief bill, and that votes on a budget resolution would begin as early as next week. The latest news, on the other hand, said the White House plans to split the new crown epidemic aid package in two. But this claim was refuted by Biden aides. It seems that although the Democrats have control of the House and Senate, there are still obstacles in grinding out the details of the stimulus. For this reason the Democrats are once again speaking out, whether or not the Republicans are involved, the Senate will begin moving forward with the stimulus bill next week. Can the Democrats “break through”? We’ll see.
The Federal Reserve maintains a highly accommodative rhetoric. In addition, this week the Federal Reserve held its first interest rate resolution in 2021, keeping the federal funds rate unchanged at 0%-0.25%. On the bond purchase guidance, the Fed said to continue the current pace of asset purchases until substantial progress is made on the target. The Fed’s easing rhetoric was largely in line with expectations and did not give the market much of a surprise.
Gold was under pressure to the downside this week. While the dollar index oscillated upward, gold saw a decline, falling $10 during the week. Although the gold price once shot up to $1863.94 per ounce, but then gave back the gains. In addition to a stronger dollar, U.S. bond yields were at high levels, which also weighed on gold.
Silver surged during the week. Surprisingly, while gold was under pressure to the downside during the week, silver saw a rally, up 2.4%. Options volume for the world’s largest silver ETF hit a record high of 2.24 million lots on Thursday.
The euro fell more than 80 points for the week. In non-U.S. currencies. The euro fell more than 80 points against the dollar this week. ECB policymakers have agreed to take an in-depth look at the phenomenon of the euro’s appreciation against the dollar, focusing on whether the exchange rate was affected by differences in stimulus policies. This review could influence how the ECB responds to the appreciation of the euro. This may force the ECB to provide more monetary stimulus measures. However, some analysts say that the threshold for more accommodative policy to curb the exchange rate rise is still very high.
The British pound rallied more than 50 points during the week. Unlike the euro, which was under pressure, the pound saw a rise. In total, the British pound rose more than 50 points against the dollar. However, we should also be wary of the risk of a GBP pullback. The pound is also facing more bearish factors at the moment, including a stronger dollar, the UK epidemic and the homeland blockade measures.
Weak performance of the Australian dollar. Australian dollar. AUDUSD oscillated downward this week, hitting a low of 0.7591 before ushering in a small rebound under, though the pair still fell more than 40 points in a week’s worth of sentiment.
U.S. oil was sideways and oscillating this week. Finally, take a look at the oil market. U.S. oil oscillated sideways this week around the $52 level, supported by a nearly 10 million barrel drop in EIA crude inventories. However, demand concerns, triggered by the embargo measures, are still weighing on oil prices.
[Risk Warning].
Euro: Investors hedge euro investments Europe and the United States need to be cautious in the near future
Credit Agricole said that fears of a double-dip recession in the eurozone have led to a reversal of unhedged ETF equity market inflows. Another risk is the contagion of funds from Italy to other peripheral countries, thus inhibiting further inflows. This, coupled with the threat of another possible interest rate cut from the ECB, could encourage investors to start hedging their euro investments again.
JPY: Agencies discuss the US-JPY outlook for a short-term move up to 105.68
Credit Suisse discusses the technical outlook for the USDJPY, expecting the pair to head towards 105.68 in the coming weeks. The bank expects the USDJPY to first sustain an upside move at 104.75-104.77. After reaching 105.13-105.17, it will move up to the 200-day SMA at 105.65-105.68 and the November high.
GBP: Pound range-bound, expected to hover at 1.3580-1.3760
According to UOB technical analysis, GBPUSD is expected to hover in the 1.3580-1.3760 range in the coming weeks. In the short term, the currency is currently trading around 1.3710 and could fall towards 1.3635 and then 1.3615. On the upside, resistance is at 1.3730.
[Key Outlook].
Canada‘s GDP may remain weak at 21:30
First, let’s take a look at Canada’s GDP data, which has gradually declined since reaching a high of 6.5% in June, recording 0.4% in October. The Canadian Imperial Bank of Commerce noted that the Canadian economy is still in a deep recession. Even though Canada’s GDP rose in October, while growth is expected to maintain a rise in November, the economy remains severely weak. October and November Canadian economic data indicate that the economy is struggling, and the implementation of the latest round of restrictions in Canada may weaken the market’s economic expectations for December.
Currently, the market expects Canada’s monthly GDP rate to be 0.4% in November. If the published value is better than expected, it may be negative for USD/CAD; if the published value is less than expected, it may be positive for USD/CAD.
The outbreak in Canada has not been effectively controlled since last November. Recently, Canada has a tendency to increase the blockade, which will drag down the Canadian economy, so in the short term, it is difficult for the Canadian economy to have a bright performance.
21:30 U.S. December PCE data is expected to fall back
Then, we will focus on the U.S. PCE data will be released. In December, the data may fall further, finishing December data can be found, CPI data rebounded, but U.S. retail sales fell further, non-farm payrolls fell by 140,000.
Currently, the market expects the U.S. core PCE price index for December at an annual rate of 1.3%, if the published value is better than expected, or good for the dollar; if the published value is less than expected, or negative for the dollar.
Also pay attention to the monthly rate of PCE price index and monthly rate of personal spending released at the same Time. You need to pay attention to the impact of this set of data on the dollar index.
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