[Market Review]
The dollar index continues to weaken. The dollar remains weighed down by optimism over a second coronavirus vaccine, falling to a one-week low in muted trading during the day. The outlook for the dollar is also not positive, as the Federal Reserve and the US Congress may take more steps to mitigate the economic damage of the new coronavirus epidemic.
Gold moved in a narrow range. Next, let’s focus on gold. At one point, gold prices fell below the $1,880 mark, reaching as low as $1,976.77 per ounce. News on the development of a new coronary vaccine may have dampened safe-haven demand, but the accelerating number of new coronary cases and the weakening U.S. dollar were countervailing forces. The market awaits news on fiscal stimulus measures to help gold break out of its recent narrow range.
Silver is volatile and lower. Silver’s trend is roughly similar to gold’s. The price of silver is trading at 24.4-24.5. The price of silver is trading in a narrow range of 24.4-24.8. It opened lower this morning, reaching as low as $24.31 per ounce before returning above the $24.4 mark.
The euro rose slightly. In non-US currencies, the euro rose slightly against the dollar, recording four consecutive gains. The weakness of the dollar pushed the euro up. However, investors are equally concerned about the ongoing spread of the epidemic in European countries, as many countries in the euro zone have taken a partial or full blockade of economic activity to combat the spread of the virus, economic momentum before the end of the traditional consumption season is bound to be greatly affected, which also curbed the upside of the euro. The euro’s recent gains have been limited, and there is still considerable resistance above the 1.19 handle.
FXSTREET view: Euro and US risks are biased to the upside. FXSTREET points out that in the 4 hours, EURUSD is above its 20-day, 100-day and 200-day moving averages. Technical indicators have been flat, but still within positive levels. In general, the risks to the currency are on the upside, but the upward momentum is not that strong. For now, we can focus on 1.1885; a break of this level would allow us to continue to watch 1.1920 and 1.1965; if there is a pullback, we can watch 1.1830, 1.1790, and 1.1740.
The British pound is strong on the upside. Compared to the euro, the pound’s rally seems to be more pronounced. There are media reports that the UK may reach a post-Brexit trade deal with the EU early next week. The pound broke above Monday’s highs against the dollar, reaching as high as 1.3272.
Bitcoin climbed sharply. Let’s look at Bitcoin again. At one point during the day, Bitcoin stood at the $17,868 mark, a new high since December 2017, and has since been in a high consolidation mode.
U.S. oil went from up to down. Finally, let’s look at the oil market. U.S. oil went from up to down. Investors are divided on the fundamental long and short lines of the news study. On the one hand, the positive impact of vaccine development remains. On the other hand, everyone had to remain focused on the unending political stalemate in the US and the impact of the major outbreak in Europe on the level of economic activity. In addition, API crude oil inventories recorded a sharp increase, which also weighed on oil prices. The OPEC+ Joint Ministerial Monitoring Committee did not give a clear recommendation on whether the production increase should proceed as scheduled, and the final decision will be made at the OPEC+ All Ministers Meeting on November 30-December 1. This adds further uncertainty to OPEC’s decision to delay its production increase.
On the Bond Market
Overnight, the yield on China’s 10-year Treasury note rose by 0.9%, while the yield on U.S. 10-year Treasury note fell by 4.94% and the yield on U.S. 3-month Treasury note fell by 17.48%.
In the stock market
U.S. stocks closed all down, with the S&P 500 down 0.43%, the Nasdaq down 0.21%, and the Dow Jones down 0.56%; by this morning, China’s stock market opened mixed, with the Shanghai Composite down 0.08%, the ChiNext down 0.05%, and Hong Kong’s Hang Seng up 0.07%.
[Risk Alert]
Euro: Recovery Fund Fears Delay in Disbursement, Euro to the Downside
On Monday, Hungary and Poland voted down the European Union’s budget for the next seven years, making it impossible to start a 750 billion euro reconstruction program. The euro will face limited downside risk amid a possible delay in the release of the EU recovery fund, but the issue will eventually be resolved, according to Mitsubishi UFJ Tokyo.
Canadian dollar: dollar weakness to support the Canadian dollar, the U.S. and Canada may look to 1.29
Analysts at Citi expect that USD/CAD could fall to 1.29 in March and to 1.25 in 6-12 months. the bank believes that the depreciation of the U.S. dollar will be a driving factor for the Canadian dollar. In addition, the Canadian government continues to support the economy. On the central bank side, the Bank of Canada has suspended some easing measures, which may also support the Canadian dollar. Technically, the USD/CAD RSI is in neutral territory and is likely to fluctuate between 1.2929-1.3281 in the short term, with the next support level at 1.2783.
Pound: UK-EU trade talks dawned GBP or up to 1.3320
The news that the U.K. and the European Union have reached a trade agreement as soon as “early next week” has supported the strength of the pound. It is the first time in the history of the company that the company has been involved in the development of the company.
[Key Outlook]
15:00 U.K. October CPI monthly rate is expected to be weak
First, let’s focus on the CPI data that will be released in the UK. UK September CPI monthly rate of 0.4%. Agencies commented that the UK CPI monthly rate in September, compared to the August data has improved greatly, transportation costs, restaurant and café prices, the biggest contribution to the upward movement of prices.
By October, combing the UK data can be found: services PMI weakened, manufacturing PMI up, RICS house price index hit a new high since 1999, the unemployment rate has also improved. So, it seems that the October UK CPI data is not too pessimistic.
Even so, it should be noted that, at present, the market is expected to UK October CPI monthly rate of -0.1%, if the published value is greater than expected, or good for the pound; otherwise, will be short GBP.
At the same time, investors should also pay attention to the CPI annual rate and the monthly rate of retail price index released at the same time, if this set of data is better than expected, the pound may be stronger.
15:00 EIA crude oil inventories may increase
Next, let’s focus on the upcoming release of US EIA crude oil inventories. Last week, the EIA crude oil inventories were released with an increase of 4.278 million barrels. This morning, API crude oil inventories have been released, with an increase of 4.174 million barrels, much higher than expected.
According to past experience, API inventory data and EIA inventory data have a strong positive correlation, so EIA crude oil inventories may also increase.
Even so, it should be noted that the current market expects the U.S. EIA crude oil inventories to increase by 1.95 million barrels in the week to November 13, if the released data exceeds expectations, oil prices may fall in the short term; if the inventory data is not as expected, oil prices are expected to be stronger.
Thursday 00:30 Bailey’s comments may tend to be cautious
Finally, let’s focus on the speech that Bank of England Governor John F. Bailey will deliver. In the last week, he said that the economy is recovering strongly, but the recovery is very uneven. He also said that the second wave of the epidemic in the UK may peak this week. But the central bank is in no hurry to introduce negative interest rates. Yesterday, he added that the neo-crowning epidemic and the process of building future relations with the EU are adding to the uncertainty.
All in all, Bailey is likely to emphasize the continuing economic impact of the epidemic, while expressing concern about the UK-EU trade talks. Overall, Bailey’s stance will be cautious.
Also of note today are the following data.
15:00 U.K. October Retail Price Index Monthly Rate: Previous -0.3%, Forecast -0.1%.
18:00 Eurozone October CPI final annual rate: previous -0.3%, forecast -0.3%.
18:00 Eurozone October CPI monthly rate: previous value 0.2%, forecast 0.2%.
21:30 Canadian Oct CPI: previous -0.1%, forecast 0.2%.
21:30 U.S. Total New Housing Starts in October Annualized: previous value 1.415 million, forecast 1.146 million.
21:30 Total US October Building Permits: Previous 1.545 million, Forecast 1.560 million.
Thursday 01:15 New York Fed President Williams speaks.
Thursday 07:00 Dallas Fed President Kaplan speaks.
Thursday 08:30 Australia’s October quarterly unemployment rate: previous 6.9%, forecast 7.1%.
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