[Market Review]
The price of gold plummeted $30 during the day. Likewise, these two factors have weakened gold’s safe-haven appeal, with the price of gold dropping $30 during the day. Saxo Bank’s head of commodity strategy said traders will now focus on the key support level of $1,800.
Silver prices once lost the $23 mark. Like gold, silver is also in a state of volatility and weakness. At one point, the price of silver lost the $23 mark and then recovered. By the end of the day, silver was down 1.45% at $23.23 an ounce.
The euro rose 50 points during the day. In non-U.S. currencies, the EURUSD rose more than 50 points on the day due to the weakness of the U.S. dollar and an uptick in risk appetite.
FXSTREET’s view: Europe and the U.S. focus on 1.1920. What’s next for the euro? FXSTREET pointed out that in the 4-hour chart, EURUSD is above the 20-day, 100-day and 200-day moving averages; technical indicators are stuck in the mid-range, lacking direction. The pair needs to clear the resistance zone at 1.1920 to really turn bullish, at which point we could look up to 1.1960 and 1.2010; if there is a pullback, we could watch out for 1.1860. Once it breaks below 1.1810, the risk will shift to the downside, at which point we will have to watch out for support at 1.1770.
The pound remains at more than two-month highs. Turning to the British pound, GBPUSD is currently trading at around 1.3360, maintaining a two-month high. Investors are expecting a deal to be reached in the UK-EU negotiations this week. However, some analysts point out that although reaching an agreement will bring short-term gains to the pound, this will soon be digested by the market, after which the market will refocus its attention on the Bank of England’s easing policy prospects, which will push the pound down again.
U.S. oil once rose above the 45 dollar mark. In the oil market, the formal start of the U.S. presidential power transfer process and the optimistic news of vaccines injected optimism into the financial markets, and U.S. oil broke through the $45 mark at one point, rising to the highest level since the outbreak of the pandemic in the spring of this year.
The U.S. and Canada continued their downward trend. Finally, let’s look at the Canadian dollar. The outlook for demand in the oil market continues to be positive, directly benefiting the Canadian dollar, which is closely linked to oil prices.
In the bond market
Overnight, the yield on China’s 10-year Treasury note rose by 0.69%, the yield on the US 10-year Treasury note rose by 1.44%, and the yield on the US 3-month Treasury note fell by 15.5%.
In the stock market
U.S. stocks closed together rose, the S&P 500 index rose 1.62%, the Nasdaq rose 1.31%, the Dow Jones index rose 1.54%; to this morning, the Chinese stock market opened in the red, the Shanghai Composite Index rose 0.43%, the ChiNext index rose 0.12%, Hong Kong’s Hang Seng index rose 0.87%.
[Risk Alert]
U.S. Dollar: U.S. Index Tests Bottom of Range, Fears of Continued Downturn
Bank of Tokyo-Mitsubishi UFJ said that the dollar index tested the bottom of the 92.00-94.00 range again, and the U.S. economy appears to be doing better than Europe, thus questioning the prevailing bearish sentiment on the dollar. Despite the favorable U.S. election results and good news on the vaccine front, the U.S. dollar has struggled to regain downward momentum against other major currencies in recent weeks.
GBP: Pound may extend rally with upper resistance at 1.3422
Commerzbank pointed out that the GBPUSD may encounter resistance at 1.3422, after which it may fall to 1.3004. Analysts pointed out that although the Brexit negotiations reached a resolution to bring short-term gains to the pound, it will soon be digested by the market, after which the market will refocus on the Bank of England’s easing policy prospects, which will push the pound exchange rate downward again. In the most optimistic tone, the GBPUSD could be seen at 1.3514, but after that there is still a lack of further upside potential.
New Zealand dollar: multiple factors to support the New Zealand dollar or challenge 0.7150
The New Zealand dollar recently broke above 0.70 against the U.S. dollar, and some strategists say that the strength of the New Zealand dollar is due to strong risk appetite, a weak U.S. dollar, and the market’s ruling out the possibility of the New Zealand Fed introducing negative interest rates. The currency pair may continue to rise, the next resistance level is 0.7150, next year may rise to 0.75.
[Key Outlook]
21:30 U.S. GDP to Remain Strong in Q3
First of all, let’s focus on the revised third quarter GDP that will be released in the US. Since the beginning of Q3’18, the overall US GDP has weakened, recording -31.7% in the second quarter of the year. At the end of last month, the U.S. released the preliminary third-quarter GDP rate of 33.1%. Some market analysts believe that the U.S. economy rebounded in the third quarter with a record annual growth rate of 33.1%, but the recovery is incomplete and the economy is still below the level of the end of 2019.
Currently, the market expects the U.S. real GDP in the third quarter of the annualized quarterly revised value of 33.1%, if the published value is better than expected, or good for the dollar index; otherwise, or bad for the dollar index.
If the revised value is revised downward, the USDJPY will be under downward pressure. Also, keep an eye on the initial jobless claims, which will be released at the same time.
23:00 U.S. October PCE data is expected to decline
The PCE data will be released in the U.S. In July and August, the annual rate of PCE data picked up and fell to 1.5% in September, in October, the data may fall further, finishing the October data can be found, although the total number of new housing starts is higher than expected, manufacturing production accelerated, but retail sales and CPI are less than expected.
Currently, the market is expected to the U.S. core PCE price index in October at an annual rate of 1.4%, if the published value is better than expected, or good for the U.S. dollar; if the published value is not as expected, or bad for the U.S. dollar.
Also keep an eye on the PCE monthly price index and personal spending monthly rate that will be released at the same time. You need to pay attention to the impact of this set of data on the dollar index.
23:30 EIA crude oil inventories may increase
Turning our attention to the oil market, let’s focus on the upcoming release of U.S. EIA crude oil inventories. Last week, the EIA crude oil inventories were released with an increase of 768,000 barrels. This morning, the API crude oil inventories have been released, increasing by 3.8 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 decrease by 333,000 barrels in the week to November 20, if the released data exceeds expectations, oil prices may fall in the short term; if the inventory data is less than expected, oil prices are expected to be stronger.
Thursday 03:00 Fed minutes are dovish
Finally, let’s focus on the minutes of the Federal Reserve meeting that will be released. At the beginning of the month, the Fed left its benchmark interest rate unchanged at 0%-0.25% and did not change the pace of bond purchases in the Fed’s FOMC statement. The Fed also indicated that it would adjust its monetary policy stance appropriately if risks arose that could impede the achievement of the Fed’s objectives, and that it might change the duration, size, and composition of its asset purchases if necessary. The Fed also intends to make adjustments to its economic expectations in December. In addition, the Fed is calling for fiscal support.
On balance, the Fed minutes may reveal that the Fed may adjust its asset purchase program as well as its economic expectations. It is more likely that the minutes will be dovish, and there is a risk that the USDJPY will come under pressure.
Also of note today are the following data.
17:00 Swiss ZEW Investor Confidence Index for November: previous value 2.3.
21:30 U.S. initial jobless claims for the week of Nov. 21: previous 742,000, forecast 730,000.
21:30 U.S. October durable goods orders monthly rate: previous value 1.9%, 0.9% forecast.
23:00U.S. November University of Michigan consumer confidence index final value: previous value 77, forecast 77.
23:00U.S. Personal Spending in October: previous 1.4%, forecast 0.3%.
23:00Total US October New Home Sales: Previous 959,000, Forecast 970,000.
23:00 US October core PCE price index: previous value 0.2%, forecast 0%.
Thursday 01:00 US EIA Natural Gas Inventories for week ending November 20: previous 31 Bcf, forecast 33 Bcf.
Thursday 02:00 U.S. weekly oil drilling total for the week of November 27: 231 previous, forecasted 231.
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