[Market Review].
Biden signed the stimulus bill early. Next, let’s focus on the dollar index. The dollar fell 0.27% this week and is now trading near the 90 mark. Earlier, U.S. bond yields continued to be under pressure, dragging down the dollar. In addition, President Joe Biden signed a new $1.9 trillion crown stimulus bill, marking the official entry into force of the bill, which also limited the dollar’s gains. However, the economic data released this week was generally positive, which produced some support for the dollar. Among them, the number of U.S. initial jobless claims hit a new low since November last year, while the number of job openings grew in January to the highest level in almost a year. The monthly wholesale sales rate released earlier also recorded a 4.9% rate, a new high since June last year. The CPI data for February, while unchanged from expectations, was also the ninth consecutive month of growth. This all indicates that the pace of the U.S. economic recovery is showing signs of improvement.
Gold rose and then fell. Compared to the previous week, the dollar and U.S. bond yields were relatively weak, which boosted gold. Gold surged by more than $20 this week, once approaching the $1,740 mark upward, then fell back and is now hovering around $1,720.
Silver is trading around $26. Silver has moved roughly similarly to gold this week, up 4% during the week to a high of $26.43 per ounce, and is currently in a narrow range around the $26 mark.
The European Central Bank interest rate resolution was left unchanged. The dollar weakened while non-U.S. currencies generally rallied. The euro rose 40 points against the dollar during the week. The European Central Bank interest rate resolution is on hold. According to officials familiar with the matter, although the ECB has pledged to accelerate purchases to keep yields under control, most officials have no intention of expanding the 1.85 trillion euro emergency bond purchase program. In addition, if the economic outlook allows, the pace of purchases will slow down.
The British pound is performing strongly. Compared with the euro, the pound’s rally this week was more aggressive. The pound climbed all the way from 1.38 to 1.4 near the dollar, up a total of 200 points.
U.S. oil recovered some of its lost ground. Finally, take a look at the oil market. U.S. oil fell and then rose this week, hitting a low of $63.12 per barrel. Both API and EIA Crude Oil inventories released this week recorded a big increase of over a thousand barrels, dragging down oil prices. In addition on Thursday night, OPEC released its monthly crude oil market report, in which the organization raised its forecast for global crude oil demand growth in 2021 to 5.89 million barrels per day from 5.79 million barrels per day. The overall non-OPEC supply growth forecast for 2021 was raised to 950,000 barrels per day, compared to the previous forecast of 670,000 barrels per day.
[Risk Warning
U.S. Debt: Economic growth expected to be strong. Banks raise U.S. bond yields
Deutsche Bank raised its forecast for the U.S. 10-year Treasury yield for late 2021 by one percentage point to 2.25 percent, based on economists’ expectations for strong economic growth and the risk of rising inflationary pressures. The new forecast, the strategist said in the report, reflects a 65 percent probability that the U.S. economy will return to pre-2014 conditions. The analysts predicted that the U.S. Congress is expected to start the infrastructure package in September, as well as the Federal Reserve or advance warning to the market to reduce the size of the QE asset purchase program.
Gold: negative factors still exist gold fears under pressure
BlackRock Global Allocation Fund portfolio manager warned that more stimulus and vaccine allocation advancement will accelerate the pace of economic recovery. If that does happen, real interest rates could continue to rise from levels that are at historic lows. This would be bad for gold.
Canadian Dollar: Canadian Dollar to Rise in Near Term but Fears Pullback in 2022
The near-term outlook for Canada‘s current account, according to the Canadian Imperial Bank of Commerce, will remain supportive of the Canadian dollar. However, in the longer term, the price of oil and some other commodities is falling as global supply recovers, and the travel deficit will get higher after 2022. This will lead to another widening of the current account deficit. In addition, the bank believes that there is more room for the market to anticipate a Fed rate hike in advance compared to the Bank of Canada. Overall, the bank expects the Canadian dollar to rise somewhat in the near term, but will fall back in 2022.
[Key Forecast].
15:00 UK GDP fears continued weakness
First of all, let’s pay attention to the UK will release the three-month GDP monthly rate in January. In December last year, the UK GDP recorded 1%, indicating that the pace of economic recovery in the UK continues to slow. The economy was hit hard by the Epidemic that forced the UK to go into lockdown again.
Currently, the market expects the UK January three-month GDP monthly rate of -2.6%, if the published value is lower than expected, or bearish pound; conversely, may be positive pound.
In addition, the monthly rate of British manufacturing output and industrial output data will be released at the same Time, the current market is not optimistic about these groups of data, you need to be alert to the pound retracement.
21:30 Canadian employment data is expected to pick up
In January, the number of Canadian employees recorded -212,800, due to the retail shutdown forced many businesses in Canada to close, Canadian employment data in January this year, far less than economists expected. Statistics Canada reported that Canada’s unemployment rate rose 0.6 percentage points from last December to 9.4%, the highest level since last August.
Economists at the Bank of Montreal said that while there were job losses, the vast majority of those lost were part-time positions. In addition, employment actually increased in some sectors, such as construction, which was boosted by the relatively mild weather in January. He believes that many jobs will recover quickly as restrictions ease.
Currently, the market expects that Canadian employment may increase by 75,000 in February, which may be negative for the Canadian dollar if the published value is lower than expected; conversely, it may be positive for the Canadian dollar.
In addition, Canada’s monthly wholesale rate in January and the U.S. monthly PPI rate in February will be released at the same time, you should also consider the impact of these groups of data on the market.
Recent Comments