[Market Review]
Dollar Index Extends Declines. The dollar index extended its decline during the day, hitting a new one-week low of 92.47 at one point.The good news about the Moderna new crown vaccine dampened safe-haven demand, pushing the Dow Jones Industrial Average to a record high.A key advantage of the Moderna vaccine is that it does not require ultra-low temperature storage like the Pfizer vaccine, which makes it easier to distribute. Some analysts write that for now, we may continue to see the dollar fluctuate within a relatively narrow range. However, the dollar is likely to come under pressure in the coming months as the Federal Reserve maintains an accommodative stance for longer.
Gold jumped $30 in the short term. Moving on to focus on gold, gold prices started the session higher and kept approaching the 1,900 mark, reaching as high as $1,898.95 per ounce, before dropping slightly. During the European session, after the release of the latest vaccine testing data from US drug company Moderna, gold jumped nearly $30 in 15 minutes, reaching as low as $1864.24. However, while the overnight vaccines were good for risk assets, gold was supported at 1865 and is back near 1890 again, so the vaccine benefits are dissipating.
Silver fell before rising. News of the vaccines also hit silver, with the price of silver at $24.2 an ounce, before recovering most of its gains. Some analysts said that the previous Asian factory output data was higher than expected, reinforcing the view that the world’s largest industrial metals consumer demand is strong, silver demand will also be strong, the overall still optimistic about the performance of silver relative to gold.
The euro rose to a one-week high. In the case of non-US currencies, EURUSD rose to a one-week high, reaching a maximum of 1.1869. Asia released strong economic data, the start of the week investors are relatively optimistic, vaccine news also provided support to the euro.
FXSTREET view: EURUSD focus on 1.1885. So how will the euro run next? On the 4-hour chart, EURUSD is above the 20-day, 100-day and 200-day moving averages. Technical indicators are at positive levels. In case of further growth, we can look at 1.1885, 1.1920 and 1.1965; in case of a pullback, we can watch out for 1.1790, 1.1740 and 1.1695.
Pound Breadth. Coming back to the pound, the pound has also been quite volatile during the day. During the European session, the pound gave back all of its previous gains against the dollar, falling to 1.3165 at one point before rebounding somewhat. Investors are still further looking at the prospects for UK-EU negotiations, and after further interpretation of previous statements by UK and European officials on various occasions, the overall market sentiment regained optimism.
U.S. oil surged 4% at one point. The last to focus on the oil market. U.S. oil once soared 4% to $ 42.06 a barrel. Affected by the vaccine news, safe-haven funds swarmed out, the crude oil market was boosted. In addition, the OPEC+ Joint Technical Committee recommended delaying the crude oil production increase plan by three to six months, offsetting concerns about new cases of coronary pneumonia and weak fuel demand due to increased production in Libya. In addition, oil prices were also supported by positive economic data from Asia.
On the bond market front
Overnight, the yield on China’s 10-year government bonds rose 0.71 percent, while the yield on US 10-year government bonds rose 1.25 percent and the yield on US 3-month government bonds fell 14.31 percent.
On the stock market front
U.S. stocks closed all together, the S&P 500 index rose 1.16%, the Nasdaq rose 0.80%, the Dow Jones index rose 1.6%; to this morning, the Chinese stock market opened in the red, the Shanghai Composite Index rose 0.01%, the ChiNext index rose 0.1%, Hong Kong’s Hang Seng index rose 0.51%.
[Risk Alert]
U.S. dollar: European epidemic worsening dollar short-term or up
TD Securities said the dollar is likely to rally this month as hospitalizations for new coronary infections surge and global public activity decreases. The strategist pointed out that the hospitalization rate in some European countries has been close to its previous peak of 50%, which is not good for the short-term movement of the euro. And the new restrictions imposed by the government will affect economic growth indicators. TD Securities estimates that the dollar could rise 2% over the next month and the euro faces downside risks.
GBP: European trade talks foggy, caution pound under pressure to the downside
The latest news shows that Brexit trade talks between the UK and the European Union are still deadlocked on key issues, which has investors worried that a “hard Brexit” may be difficult to avoid. In addition, the UK and European economies are also under pressure. Based on this, Commerzbank is bearish on the pound in the short and medium term, believing that the pound will retest the 1.30 mark.
Gold: U.S. stimulus plan no progress this week, gold prices are expected to move higher
TD Securities expects gold prices to move higher this week. Political turmoil continues in the U.S., which signals a lot of risk for the market. In addition, no progress has been made on the new US stimulus package, which means more pressure on the Federal Reserve. TD Securities believes that gold needs to focus on the 1850 to 1930 area this week.
[Key Outlook]
21:30 US retail sales fear decline
First, let’s focus on the U.S. will release its monthly retail sales rate for October. U.S. retail sales rebounded to a 17.7% monthly rate in May, the largest monthly gain in history; August fell back to 0.6%.September recorded 1.9%.CNBC commented that consumer spending grew much faster than expected in September, and retail sales rose 1.9%, indicating that the biggest driver of the U.S. economy is still in a healthy state.
Currently, the market is expecting a 0.5% monthly rate of retail sales in the U.S. for October, and if the data meets or exceeds expectations, the U.S. dollar index is expected to gain support. Conversely, if it comes in below expectations, the dollar index could take a hit.
Overall, the market’s expectations for the data are not optimistic, and if the release falls far short of expectations, the US Dollar Index could come under pressure.
22:00 Bailey comments may tend to be pessimistic
Then, come to focus on the speech that Bank of England Governor Bailey will be giving. In the last week, he said that the economy is recovering strongly, but the recovery is very uneven. Markets are not calling for yield curve control, and the Bank of England is in no hurry to implement negative interest rates. He also said that the second wave of the UK epidemic could peak this week.
Based on this, we predict that Bailey is likely to emphasize that the economic impact of the contagion is ongoing and will aggressively use policy tools to restore the economy.
Overall, it is more likely that Bailey’s stance is on the pessimistic side, but he is likely to emphasize that he will not rush to use negative interest rates.
Wednesday 03:00 McClellan may maintain cautious stance
Tomorrow morning will see a speech by Bank of Canada Governor McCollum. At the end of last month, he stated that the epidemic had resumed and that it would take quite some time for the economy to fully recover. The Bank of Canada will continue to provide monetary stimulus to support the economic recovery. There is more room for a quantitative easing program, but negative interest rates have not yet been considered.
Based on this, we believe that McCollum will emphasize that the economic recovery will take longer and that the Bank of Canada will continue to provide monetary policy stimulus.
In addition, he may reiterate that negative interest rates will not be considered for the time being. Overall, it is more likely that McCollum will maintain his cautious stance.
Wednesday 05:30 API crude oil inventories are expected to increase
Finally, come to the attention of the United States will release API crude oil inventories. Last week, the API report showed that U.S. crude oil inventories fell by 5.147 million barrels. The subsequent release of EIA crude oil inventories unexpectedly rose by more than 4 million barrels.
By this week, the market expects the US API crude oil inventories to increase by 1.95 million barrels in the week to November 13. If the published value is larger than expected, oil prices may come under pressure; otherwise, oil prices may rise.
Yesterday, the news about vaccines pushed up the market demand for crude oil expectations, in addition to OPEC + may delay the increase in production, but also supported the price of oil.
Also of note today were the following data.
21:30 United States import price index for October: previous 0.3 per cent, forecast 0.2 per cent.
21:30 Canadian wholesale sales for September: previous value 0.3 per cent, forecast 0.4 per cent.
22:15 U.S. industrial output in October MoM: previous value -0.6%, forecast value of 1%.
23:00 US Nov NAHB housing market index: previous value 85, forecast 85.
23:00 US Sep business inventories MoM: previous value 0.3%, forecast 0.5%.
Wednesday 00:00 ECB President Lagarde speaks.
Wednesday 03:00 New York Fed President Williams speaks.
Wednesday 06:00 Australian Federal Reserve President Lowe speaks.
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