[Market Review]
U.S. economic data is beautiful. The preliminary Markit manufacturing PMI rose to 56.7 in November, the highest since September 2014, while the preliminary Markit services PMI rose to 57.7, also the highest since March 2015. After the release of the data, the dollar index rose sharply, climbing as high as 92.81. The price of gold plummeted by $20 at one point.
At one point, the price of gold plummeted by $20. Similarly, gold prices were also affected by the US economic data. After the release of the data, the price of gold plummeted by $20 at one point. In addition, AstraZeneca said on Monday that its neocrown vaccine may reach about 90% effectiveness, and plans to start supplying neocrown vaccine by the end of the year, this news also suppressed the price of gold.
Silver weakened sharply. Silver’s trend was roughly similar to gold’s. Earlier in the day, silver prices were hit by positive vaccine activity. Earlier, the price of silver was influenced by the positive vaccine news and started a volatile downward trend, and as the dollar index rebounded sharply, silver also extended its decline and is currently trading near $23.6.
The euro plunged 100 pips. Non-US currencies. During the day, Eurozone PMI data was largely in line with expectations, showing that European economies are not as pessimistic as expected due to the current embargo measures. This pushed the euro to strengthen against the dollar. However, as the dollar strengthened again, the euro against the dollar from 1.19 above the short term down to 1.18, a plunge of 100 points.
The British pound rose first and then fell. Like the euro, the pound also rose and then fell. Earlier, under the influence of the beautiful UK PMI data and the market’s optimistic expectations of the Brexit negotiations, the pound was close to 1.34 against the dollar, but then the pound also failed to stabilize the rally, giving back the previous gains.
FXSTREET VIEW: GBP selling interest is limited. FXSTREET points out that on the 4-hour chart, GBPUSD once again broke above the 20-day moving average, and well above the 100-day and 200-day moving averages. Technical indicators have corrected the overbought condition, but the bearish momentum has weakened and the indicators remain within positive levels, indicating limited selling interest. If there is further upside, we can watch out for 1.3365, 1.3410, and 1.3460; if there is a pullback, we can watch out for 1.3265, 1.3210, and 1.3165.
The oil market is full of positive factors. Finally, let’s look at the oil market. In the news, Saudi Aramco’s refining facilities have been attacked again by the Yemeni Houthis. This raises the geopolitical risk of global oil on the supply side again. In addition, the renewed good news on vaccines and traders’ expectations of a recovery in crude oil demand also provided momentum to the oil market. On a one-day basis, U.S. oil rose 1% during the day. According to analysts, a confluence of positive factors in the oil market is expected to stabilize U.S. oil at the key psychological support level of $43 by the end of the month.
In the bond market
Overnight, the yield on China’s 10-year Treasury note fell by 0.63%, while the yield on the U.S. 10-year Treasury note rose by 3.2% and the yield on the U.S. 3-month Treasury note rose by 3.81%.
▼Stock Market
U.S. stocks closed together rose, the S&P 500 index rose 0.56%, the Nasdaq rose 0.22%, the Dow Jones index rose 1.12%; to this morning, the Chinese stock market opened mixed, the Shanghai Composite Index fell 0.21%, the ChiNext index rose 0.13%, Hong Kong’s Hang Seng index rose 0.54%.
[Risk Alert]
Pound: multiple factors support the pound’s expected strength
Citi analysts note that the pound is about 15% below its long-term average based on traditional purchasing power parity. Looking ahead, the widespread distribution of vaccines and the Brexit deal will provide support for the pound. Citi expects that the pound could challenge 1.3482 against the dollar, with support at 1.2982.
Swiss franc: sensitivity to risk aversion declines Swiss franc faces downside risks
Credit Agricole expects the EUR/CHF to reach 1.09 by the end of the year and sees a possible upside of 1.15 for the pair. recently, the Swiss franc has been mainly driven by external factors such as global risk sentiment, but the Swiss central bank’s aggressive policy of negative interest rates coupled with monetary intervention, as well as rising speculative long positions, should reduce the sensitivity of the franc to risk aversion.
Crude oil: positive factors converge oil prices or continue to rise
Strong manufacturing data from the U.S. and Germany boosted crude oil prices. The prospect of successful vaccine development is beginning to reshape the crude oil futures curve, with some short-term futures rallying more than long-term varieties, indicating that investors expect supply and demand to return to balance.OPEC+, which will meet at the end of November, is expected to extend its production agreement. It’s not just a matter of time, but also a matter of time.
[Key Outlook]
22:00 Lagarde expected to reiterate that the ECB will adjust measures
Let’s start with the speech that ECB President Lagarde will make. Last week, she said that the Eurozone economy will be affected by the surge in new cases as the global number of new cases grows and uncertainty remains high. The ECB must help the economy, and the Emergency Anti-Epidemic Debt Purchase Program and the Targeted Long-Term Refinancing Operation will continue to be the main tools. 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 that the ECB will expand its bond purchases next month, so keep an eye out for that.
Wednesday 05:30 API crude oil inventories expected to decrease
Lastly, let’s focus on the API crude oil inventories that will be released in the United States. Last week, the API report showed that US crude oil inventories increased by 4.174 million barrels, much more than expected.
By this week, the market expects the US crude oil inventories to decrease by 333,000 barrels in the week ending November 20. If the published value is larger than expected, oil prices may come under pressure; otherwise, oil prices may rise.
Recently, strong U.S. economic data and positive news on the new crown vaccine have boosted the market’s expectations for crude oil demand.
Also of note today are the following data.
15:00 German Q3 final unchanged GDP rate: previous -4.1%, forecast -4.1%.
17:00 German IFO business sentiment index for Nov: previous value 92.7, forecast 90.7.
19:00 UK Nov CBI Retail Sales Margin: previous -23, forecast -35.
22:00September FHFA House Price Index: previous 1.5%, forecast 0.5%.
22:00September S&P/CS 20 largest cities home price index annual rate: previous value 5.18%, forecast 5%.
23:00 Conference Board Consumer Confidence Index for November: previous value 100.9, forecast 98.
23:00Richmond Fed Manufacturing Index for Nov: Previous 29, Forecast 21.
Wednesday 01:00 New York Fed President Williams speaks.
Wednesday 01:45 Federal Reserve Vice President Clarida speaks.
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