[Market Review]
The US Dollar Index has moved sharply higher. The dollar index rose sharply during the day, reaching as high as 93.22. macro strategists at Wells Fargo Securities said the dollar has begun to follow the stock market’s rise, shifting from its safe-haven status during the new crown crisis, when the dollar tended to move in the opposite direction to the stock market, a dramatic change from what we’ve seen over the past few months.
Gold plunged $11. The dollar and tech stocks climbed, reducing the demand for safe-haven assets. In addition, higher U.S. bond yields also made gold unattractive, and gold prices plunged $11 on the day.
Silver fell before rising. Next, let’s focus on silver. The silver price fell to $23.76 before the U.S. session, down $0.65 from the day’s high, and ended up 0.28% higher. Some analysts say that silver turned into a volatile mode, will show both metal properties and financial properties, with the progress of vaccines, the global economy is expected to continue to recover, continue to be optimistic about the performance of silver stronger than gold. However, the U.S. risk event remains unresolved, short-term or financial attributes are stronger.
The euro is under significant pressure. Non-US currencies. ECB President Lagarde warned that although the latest news on vaccines looks encouraging, Europe still faces the threat of accelerated spread of the virus and tightening of restrictions, with bond purchases and long-term refinancing operations remaining the ECB’s main tools. The epidemic situation in Europe remains grim, and with the dollar index sharply higher, the euro fell sharply against the dollar during the day.
FXSTREET OPINION: European and US risks are biased to the downside. So what’s next for the euro?FXSTREET notes that in the 4-hour chart, EURUSD is below its 20-day moving average, while hovering near its 100-day and 200-day moving averages. In the short term, the pair is risk-off to the downside. For now, we can look down at 1.1725, 1.1680, and 1.1630; if there is a rebound, we can keep an eye on 1.1800, 1.1840, and 1.1885.
The pound once fell back more than 80 points. The same as the euro, the pound also ushered in intra-day plunge. The first time I saw this, I thought it would be a good idea for me to get the ball rolling, but I didn’t. Earlier, the pound broke the 1.33 barrier against the dollar, a new high since September 4, but then fell more than 80 points to 1.3191. EU representatives are expected to make no new progress in the UK-EU negotiations this week.
The Turkish lira surged over 3,000 points. Let’s look at the Turkish lira again. Turkey was down more than 4% as regulators eased swap restrictions on Turkish banks and the dollar dived more than 3,000 points against the Turkish lira during the day, losing 7.81.
U.S. oil was up first and then down. Finally, a look at the oil market. Crude oil is a mix of multiple factors. Vaccine hopes and declining US crude inventories boosted oil prices. On top of that, OPEC+ focus on delaying the production increase plan by 3-6 months also limited the decline in oil prices. However, Libya will resume oil production and the epidemic’s blow to global crude oil demand has yet to recover, making it difficult for oil prices to strengthen. A comprehensive day of the market, the U.S. oil rose first and then fell, mainly in the $ 40-43 range of volatility.
[Risk Alert]
Dollar: bearish news gradually being digested to warn of dollar short profit taking
TD Securities expects the market to take profits on dollar shorts more quickly in the coming weeks. The agency strategist noted that this is because investors have already digested much of the dollar’s positive news. TD Securities said it is time to cautiously reverse the dollar’s recent weakness. In addition, some analysts say the dollar is being supported by rising U.S. bond yields, which should help the dollar make another run up before the end of the year.
EUR: Euro upside potential limited in medium term or range run
Rabobank said that markets believe the EU has taken a step towards a more coordinated fiscal policy, while the ECB is determined to dispel talk of a split in the eurozone, but given that Europe is being hit by a second wave of epidemics and faces a double-dip recession in economic output in the fourth quarter, the euro’s upside potential is quite limited. But the combination of cheap money and vaccine hopes could bring risk appetite to good levels. The agency raised its three-month target on EURUSD from 1.16 to 1.17 and its six-month target from 1.14 to 1.18, with the next few months expected to trade at 1.16-1.20.
GBP: UK may drop controversial bill Citi bullish on sterling
Citi says it is bullish on sterling in the coming weeks. This is because the UK House of Lords may reject the Internal Market Bill, which has helped the pound strengthen. In the longer term, Citi remains bullish on the pound, as the agency expects a Brexit deal to be reached, while the UK is less likely to implement negative interest rates and larger fiscal stimulus.
[Key Outlook]
15:00 UK GDP may continue to recover
First, come to the attention of the UK will publish the September three-month GDP rate. After several months of decline, the UK’s August three-month GDP rate returned to 8%. Although the August data was not as expected, but the UK economy recorded its fourth consecutive month of growth, indicating that the country is trying to recover from the recession. September, the data may continue to pick up.
Currently, the market expects the UK’s September three-month GDP rate of 15.8%, if the published value is lower than expected, or short GBP; otherwise, may be long GBP.
In addition, the UK manufacturing output and industrial output monthly data will be released at the same time, the current market for several sets of data have good expectations.
16:00 Bailey comments or tend to be pessimistic
Then, come to focus on the speech that will be delivered by the Bank of England Governor Bailey. Last week the Bank of England surprised the markets by unexpectedly increasing the amount of easing by £150 billion. Bailey said that the direct impact of the new coronary virus is expected to diminish, but the non-direct impact on the economy will continue. If the inflation outlook worsens, the Bank of England will be prepared to take all measures to achieve its target. A study of negative interest rates is currently underway.
Based on this, we predict that Bailey is likely to emphasise that the impact of the contagion on the economy is still ongoing and will actively use policy tools to restore the economy.
Overall, Bailey’s stance is more likely to be pessimistic, and if his comments push up market expectations for the Bank of England to implement negative interest rates, then the pound could come under pressure.
21:30 US October CPI monthly rate is expected to be steady
Also on Thursday, the US will release October CPI data. In June and July the U.S. CPI recorded a monthly rate of 0.6 percent. in September it fell to 0.2 percent.
By October, the data is likely to remain stable. October data can be found, ISM non-manufacturing PMI worse than expected, Markit services PMI final value better than expected. October non-farm payrolls added slightly better than expected.
At present, the market is expected U.S. October quarterly CPI monthly rate of 0.1%, if the published value is greater than expected, or good for the U.S. dollar; otherwise, the U.S. dollar.
At the same time, the United States will be announced the initial jobless claims, you also please consider, make a reasonable layout.
Friday 00:00 EIA crude oil inventories or reduced
Tomorrow morning, the US EIA crude oil inventories will be released. The EIA crude oil inventories were released last week and decreased by almost 8 million barrels. On Wednesday morning, the API crude oil inventories have been released with a decrease of 5.147 million barrels.
According to past experience, API inventory data and EIA inventory data have a strong positive correlation, so EIA crude oil inventories may also be reduced.
Even so, it should be noted that the current market expectations, the United States to November 6 week EIA crude oil inventories or reduced by 913,000 barrels, if the release of data more than expected, oil prices may be short term setback; if the inventory data is less than expected, oil prices are expected to be stronger.
Friday 00:45 Powell or call for more fiscal measures
Finally, a look at Fed Chairman Powell’s upcoming speech. At a press conference earlier this month, he stated that the economy is continuing to recover, but the pace of improvement has slowed in recent months; monetary policy is expected to remain accommodative until inflation and employment targets are met. Further support from monetary and fiscal policy may be needed at this time. If things deteriorate, the Federal Reserve may consider new tools. Further support from monetary and fiscal policy may be needed. He also called for some direct fiscal stimulus measures.
On balance, we think Powell will emphasize the slowing economic recovery, use new tools if needed, and again call for more fiscal stimulus.
In the U.S. epidemic is not under control before, Powell is likely to continue the dovish stance, please also pay attention.
Also of note today are the following data.
15:00 German final monthly CPI for October: previous value 0.1%, forecast 0.1%.
15:00 UK Q3 GDP revised annual rate: previous -21.5%, forecast -9.4%.
15:00 UK September manufacturing output monthly rate: previous value 0.7%, forecast value 1%.
15:00 UK September Quarterly Merchandise Trade Balance: previous value -9.01bn, forecast -9.5bn.
15:00 UK September industrial output monthly rate: previous value 0.3%, forecast value 0.8%.
17:00 IEA releases its monthly crude oil market report.
18:00 Eurozone industrial output for September: previous value 0.7%, forecast 0.7%.
21:30 US initial jobless claims for the week to November 7: previous value 751,000, forecasted 735,000. People
Friday, 03:00: New York Fed President Williams speaks.
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