[Market Review].
The U.S. index broke above the 91 mark. The dollar index broke above the 91 mark for the first Time since Feb. 17. The market expects economic growth and Inflation to accelerate as the U.S. government prepares to offer new fiscal stimulus measures and vaccinations become more common, with U.S. bond yields climbing and the dollar following suit. The Senate will consider the economic stimulus bill this week. Democratic aides in the U.S. Senate said the Senate could begin discussing the stimulus bill as early as Wednesday local time. Investors can focus on it.
Gold came out of the inverted V market. Gold, on the other hand, rose and then fell, coming out of the inverted V market. Gold prices continued to pull up in Asian trading, approaching the $1760 mark at the highest, but then continued to fall, down nearly $40 from the day’s high, and finally closed down 0.47%. By this morning, gold prices were pushing down closer to $1710. Higher U.S. bond yields again, a stronger dollar and rising risk appetite weighed on gold.
Silver surged higher and retreated. Next, let’s focus on silver. Silver prices moved roughly similar to gold prices. Silver touched the $27 mark on the upside at one point, but eventually closed down 0.34% to close at $26.55 per ounce.
Bitcoin was back above 50,000 at one point. On the bitcoin front, after last week’s disastrous decline, the bitcoin bulls seemed to return this week. Bitcoin was back above $50,000 at one point. Over the weekend, it was reported that bitcoin plunged because investors decided to take profits on risky assets after U.S. bond yields spiked. However, institutional demand for bitcoin appears to be continuing. In a report, Citi said that after recent traction from companies like tesla and MasterCard, bitcoin is at an important turning point where it could either become the preferred “international trade currency” or face a “speculative implosion.
Euro shocks lower. In non-U.S. currencies, the euro fell 0.22% against the dollar to 1.2048, hitting its lowest since Feb. 17. Although the French, German, and Eurozone PMI data released during the day, all recorded new highs since February 2018, overall, European economic growth is still expected to lag behind countries like the US. The ECB Governing Council said it is ready to accept inflation above target for some time.
The British pound retreated slightly. Let’s look at the British pound again. The British pound retreated slightly against the dollar. The strength of the dollar has weighed on the pound. British Chancellor of the Exchequer Sunac will announce an additional £1.65 billion to support vaccinations in his annual budget statement on Wednesday. Some foreign exchange analysts said that good progress in vaccination, as well as the expected U.S. economic stimulus, will continue to support the pound.
U.S. oil broke below the $60 mark. Finally, take a look at the oil market. U.S. oil shifted back down after a small upward move early in the session and broke below the $60 mark. Investors are concerned that OPEC+ will soon increase oil production. The survey found that OPEC+ oil production fell in February, following seven months of consecutive increases, against the backdrop of voluntary additional production cuts by Saudi Arabia. OPEC+ will meet on Thursday to discuss whether to allow an increase in production of 1.5 million barrels per day. Widespread analysis now expects the alliance to loosen controls on production after oil prices got off to their best-ever start to the year. However, it is unclear exactly what decision OPEC+ will take, and the Saudi energy minister has called on oil producers to remain “extremely cautious”.
[Risk Warning
British pound: institutions predict the trend of the pound is expected to rise in the second half of the year
In early February, Credit Agricole raised its expectations for the pound, but now realizes that much of the good news has been digested by the market. As a result, the bank now predicts that the pound will not see further gains until the second half of 2021. The bank expects the pound to fall to 1.37 against the dollar at the end of June, back to 1.38 at the end of September, back to 1.39 at the end of the year; while the euro against the pound is expected to rise to 0.88 by the end of June, and to maintain this level in the second half of 2021.
Japanese yen: three factors to limit the downside U.S. and Japan to 104 by mid-year
Bank of America believes there are three factors that will limit the downside of the yen in 2021 and will increase the risk of a rebound in the yen in the face of a pullback in the stock market. One is lower foreign exchange spreads compared to 2013 and 2018; second, tighter risky asset positions catching up with the economic cycle; and third, reduced demand for non-hedging U.S. assets. The bank expects the U.S. dollar to reach 104 against The Japanese dollar by mid-year and to touch 106 by the end of the year.
Australian dollar: Australian dollar has upside potential to end the year at 0.82
ANZ Bank said that while Australia has seen several new crown Epidemic scares, employment data and business conditions continue to rise surprisingly. Improving data and a globally accommodative financial environment suggest that Australian domestic policy will be a driver for the Australian dollar as the extension of the Australian Federal Reserve’s quantitative easing program comes into question. Globally, risk appetite and confidence in reflationary dynamics are expected to be the key drivers of AUD appreciation. The bank expects AUDUSD to touch 0.82 by the end of the year.
[Key Forecast].
11:30 Australian Federal Reserve may hint at expanding bond purchases
Today at noon, the Australian Federal Reserve will announce its interest rate resolution. In the last resolution, the Fed maintained the benchmark interest rate and 3-year Treasury yield target at 0.1%, in line with market expectations. The Australian Fed also announced that it will buy a further A$100 billion in bonds when the QE program expires, starting in mid-April at a rate of A$5 billion per week. Australian Fed officials said the agency was trying to keep up with its international counterparts in an effort to dispel speculation of premature lifting of stimulus measures.
By the end of the month, the Australian Fed is likely to stay put. Australia’s largest Life insurance group predicted that the Australian Fed may react to the big rise in Treasury yields and reiterated that the economy still faces uncertainty and is currently far from achieving its inflation and employment targets and will not raise interest rates in the short term. In addition, the Australian Fed is likely to confirm the increase in bond purchases to maintain the 3-year Treasury yield at 0.1% of the operation.
18:00 Eurozone CPI expected to strengthen in February
This afternoon, the eurozone will release CPI data. Since last August, the annual rate of Eurozone CPI has been recording negative values, and in December, remained at -0.3%, rebounded to 0.9% in January this year, rising to the highest level in five years, but this will not change the ECB’s outlook, because a series of special circumstances at the beginning of the year led to a spike in inflation, and the data are also expected to be more volatile in the coming months.
Currently, the market expects the preliminary annual rate of CPI in the Eurozone in February to be 1%. If the published value is larger than expected, it may be positive for the euro; conversely, it will be negative for the euro.
Also published is the monthly CPI rate, the current market expectations are more optimistic, which may support the euro.
Wednesday 05:30 API Crude Oil inventories or continue to reduce
Finally, come to focus on API crude oil inventories. Last week, API reported that US crude oil inventories increased by 1.026 million barrels. The subsequent release of EIA crude inventories increased by 1.285 million barrels, and the financial blog Zero Hedge commented that US crude oil production fell by an average of 1.1 million barrels per day compared to the previous week, well below the 4 million barrel drop in production reported in the media at the peak of the storm. Most of the supply is expected to recover one by one.
By the end of the week, the market expects that U.S. API crude oil inventories could fall by 1.85 million barrels in the week to Feb. 26. If the published value is larger than expected, oil prices may come under pressure; conversely, oil prices may rise.
The current need to pay attention to, this week OPEC + ministerial meeting will be held, the market is concerned that the organization after the meeting may increase global supply. Also, Saudi Arabia will stop cutting production by an additional 1 million barrels per day in April, which adds to market concerns.
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