[Market Review]
U.S. indices were volatile and downward during the week. The U.S. Dollar Index has been trading lower for several trading days and is currently trading near 92.3. Positive news about vaccines came out several times this week, and risk sentiment in the market continued to warm, suppressing the safe-haven dollar. In addition, recent hints from Federal Reserve officials about the use of more stimulus measures also continued to weigh on the dollar index. At the same time, an unexpected rise in U.S. initial jobless claims also pressured the U.S. dollar.
Weakness in gold. Gold was also weaker, breaking below the $1,860 level at one point. Positive developments in vaccines have spurred investors to pull out of gold ETFs, with a cumulative reduction of more than 50 tons since Pfizer announced its vaccine breakthrough last week. Morgan Stanley analysts said in a report that the New Crown vaccine and higher bond yields next year are building up downside risk for gold prices. The bank lowered its 2021 gold price forecast to an average of $1,835 per ounce.
Silver prices fell nearly 2.5% on the week. Silver is moving roughly like gold. Earlier in the week, the price of silver broke through the $25 barrier, but then did not stabilize its gains, slipping from $25.05 to around $23.62 before rebounding and losing nearly 2.5% on the week.
The euro recovered slightly during the week. In non-US currencies, risk sentiment continued to pick up on the back of optimistic vaccine news, and the euro saw a slight uptick against the dollar. However, the European neo-crown epidemic has been pressuring the euro. Currently, ECB President Lagarde said that an enforceable EU spending package must be introduced without delay.
FXSTREET VIEW: Europe and the US are neutral near term. In the 4-hour chart, EURUSD is above the directionless 20-, 100- and 200-day moving averages, FXSTREET noted. Momentum indicators remain within negative levels and the RSI is hovering around 55. Overall, the pair is neutral in the near term. Risks are only skewed to the downside after a break below 1.18, at which point we could look at 1.1760 and 1.1720. If a rebound is in the offing, watch out for 1.1885, 1.1920 and 1.1965.
Brexit negotiations are temporarily suspended. Compared to the euro, the rally in the pound seems to be more pronounced. In recent days, investors have been quite optimistic about reaching a Brexit agreement. This supported the pound to continue to rise. However, on Thursday, the idea became cautious. The EU’s chief negotiator, Barnier, said that negotiations were temporarily suspended due to the positive test results of a negotiator for new coronary pneumonia. In addition, it was reported that French President Emmanuel Macron urged the EU to prepare for a no-deal Brexit. Analysts at the Bank of Tokyo-Mitsubishi UFJ believe that in the event of a no-deal Brexit, the pound will fall to a range of 1.20-25 against the dollar; if a deal is reached, the pair will trade in a range of 1.34-1.37. The U.S. oil price rose more than 3% during the week.
U.S. oil rose more than 3% during the week. Finally, let’s focus on the oil market. The crude oil market got a boost as safe-haven funds flocked out of the market on the vaccine news, and U.S. oil rose more than 3% during the week. However, OPEC+ has not given a clear answer on the delay in increasing production, and rumors about the UAE considering withdrawing from OPEC+ are also boiling over. The increase in API and EIA data released this week also limited the oil price’s gains.
In the bond market
Overnight, the yield on China’s 10-year Treasury note rose 1.6%, while the yield on the U.S. 10-year Treasury note fell 1.99% and the yield on the U.S. 3-month Treasury note fell 38.14%.
In the stock market
U.S. stocks closed together rose, the S&P 500 index rose 0.39%, the Nasdaq rose 0.86%, the Dow Jones index rose 0.15%; to this morning, the Chinese stock market opened mixed, the Shanghai Composite Index fell 0.10%, the ChiNext index rose 0.17%, Hong Kong’s Hang Seng index rose 0.19%.
[Risk Alert]
Euro: TD Securities Bearish on EURUSD, Fears Fall to 1.17
TD Securities has expressed strategic bearishness on EURUSD, targeting 1.17. The firm expects 1.1920 to be a strong resistance level. The economic recovery is slowing down with the spike in new cases of coronary infections and the corresponding implementation of restraint measures, which will weigh on the euro.
Japanese yen: the Bank of Japan may intervene in the exchange rate, the U.S. and Japan fear that it will be difficult to fall below 103
Earlier, Japanese Finance Minister Taro Aso said that he was not optimistic about the continued appreciation of the yen. Investors thus renewed bets that the Bank of Japan may enter the market to regulate the yen exchange rate. UOB said that the Japanese official has been released to intervene in expectations, the dollar is expected to be difficult to break below 103 against the yen in the short term.
The Canadian dollar: the Canadian financing outlook is worrisome, the U.S. and Canada in the medium-term upside risk.
Bank of America sees upside risks to the U.S. dollar against the Canadian dollar in the medium term. The bank noted that net portfolio balances in Canada and other countries declined. This is due to a decrease in foreign purchases of Canadian debt and an increase in Canadian purchases of foreign debt and equities. At the same time, Canadian interest in U.S. assets has risen sharply. This is good for the strength of the U.S. dollar against the Canadian dollar.
[Key Outlook]
16:15 Lagarde expected to reiterate ECB will adjust measures
Let’s start with what ECB President Lagarde will say this afternoon. Yesterday, she said that the Eurozone economy will be affected by the surge in cases because of the global increase in new cases and uncertainty remains high. The ECB must help the economy, the emergency antiepidemic bond purchase program and targeted long-term refinancing operations will continue to be the main tool. Earlier, she said that the ECB will take action at its December meeting.
Based on this, we believe that Lagarde is likely to emphasize the impact of the epidemic on the economy and reiterate that the ECB will take further action in December.
Overall, Lagarde’s speech will raise market expectations for the ECB to expand its bond purchases next month, so watch out.
Saturday 02:00 U.S. oil drilling total expected to rise
Tomorrow morning, the U.S. will release the total number of oil wells drilled. The numbers have been steadily increasing in recent weeks, with 236 wells recorded last week.
By this week, the market is expecting the total number of oil wells drilled in the United States for the week ending November 20 to be 241, which could be positive for oil prices if the value released is higher than expected; otherwise, it could be positive for oil prices.
Recently, the total number of oil wells drilled in the United States continues to climb, which increases the market’s concern about the supply of crude oil, oil prices may be under pressure.
In addition, today’s data of note include.
15:00 German Oct PPI: Previous 0.4%, Forecast 0.1%.
15:00UK Oct Retail Sales: Previous 1.5%, Forecast 0%.
21:30 Canadian retail sales in September: 0.4% previous, 0.2% forecast.
21:30 Dallas Fed President Kaplan speaks.
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