[Market Review
The U.S. stimulus bill welcomed new developments. The dollar index rallied 1% strongly this week. The U.S. House of Representatives received enough votes to pass the budget plan. The plan would help fast-track approval of President Joe Biden‘s $1.9 trillion aid package, and the vote continues. But the vote in the Senate, held up by Trump‘s impeachment trial, will likely not be held until later this month or early March for a vote on the reconciliation bill. U.S. initial jobless claims registered 779,000, the third consecutive week of recorded declines. CNBC commented that this indicates that the U.S. economy continues its slow recovery from the new crown Epidemic. Federal Reserve official Kashkari believes that fiscal stimulus and job market recovery should be linked. However, Atlanta Fed President Bostic believes that the state of the economy this year will not cause the Fed’s asset purchase program to be scaled back.
The retail investors forced short war is afraid to fall. Next, let’s focus on silver. Affected by the short-selling war, silver prices have fallen sharply in the past few days and are now back down to $26 and oscillating sideways in that position. For the failure of retail investors, we can briefly summarize several reasons. First, the lack of a unified strategy, not having enough market information and misjudging the market situation. Second, traders are emboldened by the fact that the precious metals market is so different from the stock market that forcing short is not realistic. Third, hedge funds are in control behind the scenes and are the real winners. Data show that hedge funds increased their long silver positions last week, eating the dividends of this wave of silver’s rise after the first Time to pull out of the field. It is hard to say that silver’s plunge on Tuesday was not related to the departure of hedge funds. Now, the silver price has basically returned to normal volatility, retail investors can say that this forced short war is over.
Gold plunged $60 this week. Gold’s movement this week was more or less dragged down by this short-selling war. In addition, the dollar and U.S. Treasury yields higher, but also further increased the selling pressure on gold. Gold plunged $60 this week. Investors are now assessing the impact of the U.S. economic recovery, vaccine action and safe-haven demand on gold.
The euro came under significant pressure during the week. In non-U.S. currencies. The euro fell more than 160 points against the dollar during the week. In addition to the strong dollar as a factor, the euro was also weighed down by the lackluster economic data released in the eurozone this week.
The British pound surged in the short term. Let’s look at the British pound again. The British pound remained largely weak against the U.S. dollar this week, but the currency pair pulled up in a short wave last night on news of the Bank of England interest rate resolution. The Bank of England maintained the interest rate level unchanged at 0.1% and kept the total asset purchase size unchanged at 895 billion pounds, both in line with market expectations. Following the BoE’s statement, the money market pushed the BoE’s negative interest rate expectations to February 2022, compared to August 2021. In addition, the money market expects the BoE to cut interest rates by 4 basis points in December, after cutting rates by 8 basis points. After the resolution was announced, the pound moved more than 100 points higher against the dollar in the short term.
U.S. oil jumped 8% this week. Finally, take a look at the oil market. U.S. oil jumped 8% this week, hitting a high of $56.68 per barrel. Both API and EIA crude inventories released this week recorded decreases, which was positive for oil prices. In addition, OPEC and its allies pledged to continue to draw down global inventories, which also supported oil prices.
[Risk Warning
Gold: Gold prices are under multiple pressures, focusing on the low of $1764
Analysts at the financial website Forexlive pointed out that gold’s seasonal rally is weakening and fundamental factors are not playing a driving role. Inflation and deficit concerns are building up, but they are too deep for the market to focus on. And the massive retail buying of silver as well as gold this week has largely collapsed. All of these factors are keeping gold prices under pressure. For now, gold prices are likely to test last December’s low of $1,764.
Dollar: The dollar’s upward momentum is expected to continue and spread to more currencies
The head of foreign exchange strategy at TD Securities issued a report saying that the dollar broke through an important trend line to the upside this week. In addition to the already short EURUSD position, TD Securities added a pair of long USD positions to its model portfolio. The dollar is expected to rise for the second week in a row, while the euro fell to its lowest level since December and the dollar rally should extend to other major currency pairs.
Euro: Credit Suisse Bearish on Euro Focus on Support at 1.18
Credit Suisse discusses the technical outlook for the euro against the dollar. The pair’s next support level is seen at the 23.6% retracement of the entire 2020/2021 uptrend line at 1.1945, with further declines toward 1.18 in the coming weeks. a break below that would take us below 1.1695, the confluence of the 38.2% retracement of the 2020/2021 uptrend line and the 200-day SMA.
[Key Forecast].
21:30 U.S. non-farm payrolls data may have a bright performance
First of all, let’s focus on the U.S. non-farm payrolls data to be released in January. CNBC commented that last December, new jobs fell by nearly 500,000 in the month as restrictions brought on by a surge in new cases of coronary pneumonia hit virus-sensitive industries, especially bars and restaurants.
The ADP employment number was released on Wednesday and recorded 174,000. better than expected ADP data means that the non-farm payrolls data may also perform well. Currently, the market expects that U.S. non-farm payrolls may increase by 50,000 in January, with an unemployment rate of 6.7%.
Some economists point out that the employment situation in the U.S. seems to have improved in January compared to last December, but the extent of the improvement depends largely on the situation in the hotel and leisure sector. If this set of data is overall positive, the dollar index may strengthen.
Recent Comments