Spot gold last week to get rid of the decline, touched a 5-month low on Monday and began to rebound from $ 1764.57 per ounce all the way up to break the 1840 barrier, up nearly $ 80, but the last two trading days rally a little break, are slightly down. Spot silver fell below the $22 mark last Monday, but last Tuesday opened a surge mode, up more than 6%, and then reached a high of $24.3 last Wednesday, after which silver entered the horizontal finishing state.
On the crude oil side, WTI crude oil was in a sideways consolidation phase at the beginning of last week and was down to $43.91 on the third day of last week, but then bottomed out and broke through $46.65 on Friday. Brent crude oil followed a similar trend and reached $49.85 on Friday.
Foreign exchange, by the U.S. fiscal stimulus hopes to rekindle the impact of the U.S. dollar index was hit hard, the U.S. refers to all the way down since last Tuesday, from 92 near the fall to 91 below the pass, and even fell to 90.52 last Thursday. by the dollar’s decline, non-U.S. currencies rose, the euro against the dollar week rose more than 180 points, the highest reached 1.2174, refreshing the two-and-a-half-year high; pound against the dollar last Thursday At one point, it stood at the 1.35 mark, a new high since December 2019.
Bitcoin’s movement last week remained tumultuous, but with reduced volatility. At the beginning of the week, Bitcoin rose sharply, soaring to $19,919 at one point, but dived more than $1,000 in the short term last Tuesday to as low as $18,100.
This week’s events at a glance
①Keyword of the Week: Economic Stimulus
The two parties had been arguing over the size of the stimulus package, but fortunately there was some progress last week, with both parties expressing support for a $908 billion coronavirus aid package. On top of that, Democrats and Republicans face a December 11 deadline to pass a $1.4 trillion budget. If it is not passed, the government is at risk of shutting down.
Thus, the “stimulus” remains the central concern of the market this week.
Analysts say that, from the current epidemic situation, if the ultimate failure to come up with a stimulus package, the United States may have a very difficult winter. The rebound in several important economic data indicators has begun to slow, such as employment.
Over the past seven months, the U.S. has seen positive job growth, but the positive signals are getting smaller and smaller each month.
In addition, the Federal Reserve will hold its last interest rate decision of 2020 on December 17, and the market is paying attention to it. Most analysts agree that while the Fed will not challenge negative interest rates, it will determine the size of quantitative easing based on the economic recovery.
With a series of important events still hanging in the balance, an important question that will influence decisions at this juncture is: How well is the U.S. economy recovering?
The mainstream view is that the U.S. economic recovery still has some way to go and is still in a V-shaped recovery phase, with different economic data performing differently.
This week, investors may also be able to take a peek at a few of these heavyweight data.
On Thursday at 21:30, the U.S. will release the November quarterly CPI monthly rate, as well as the initial jobless claims for the week ending December 5.
On Friday at 21:30, the U.S. will release the November PPI monthly rate.
② Bank of Canada and ECB rate decisions are coming one after another!
Last week, the Australian Federal Reserve’s interest rate decision was left unchanged, and Australian Federal Reserve President Lowe also said in his speech that he still believes that the possibility of negative interest rates in Australia is extremely small.
But even so, many analysts believe that the Australian Federal Reserve is expected to maintain near-zero interest rates next year, and may expand the scale of bond purchases, as inflation and unemployment may be below the target range for some time.
The market seems to have a similar attitude toward the Bank of Canada, which will announce its interest rate decision this week.
For the Bank of Canada, the institutional survey shows that 20 out of 22 economists surveyed believe that the Bank of Canada will keep its benchmark interest rate at 0.25% until the end of 2022, but will not increase quantitative easing.
For the ECB, the market is clearly expecting more, and is already predicting a 12-month extension of its bond-buying program, and some even believe that the ECB may use aggressive and potentially spot-rate interventions to prevent the euro from continuing to appreciate.
In fact, last week many ECB officials also welcomed the extension of the bond-buying program.
According to officials familiar with the situation, if next week’s Governing Council proposes a 12-month extension of the PEPP to mid-2022, ECB policymakers may agree to the proposal.
The source also revealed that the decision could still be contested, as there is concern that extending the program for 12 months would expose unreasonable assumptions about the post-pandemic economy. There is also a proposal to extend the PEPP for 12 months, but with the option to cut the duration again in the event of a stronger-than-expected recovery.
There is also analysis that the ECB has exhausted its policy tools and that further quantitative easing will not help stop the euro from strengthening. Perhaps only aggressive, potential spot exchange rate intervention, may be able to contain the euro’s surge.
[Popular Variety Outlook]
Gold Outlook: bulls have seen $1925
After last week’s rally, gold bulls have challenged the $1,850 resistance level twice (on Thursday and Friday, respectively). Analysis indicates that if this level is broken, gold prices could climb to $1,925 per ounce.
Peter Hug, head of trading at Kitco Metals global, said that the key concern for the market is whether the gold price will break through $1850 an ounce next week. He said.
“The $1,775 level was the floor of last week’s sell-off and the gold price is holding above that level. From a technical point of view, $1850 is a strong resistance and it may take a bit of effort to break through this level. Gold has tested it twice in the last week and it is likely to break through this week.”
Charlie Nedoss, senior market strategist at LaSalle Futures Group, said gold prices are still trading near weekly highs, which is a positive sign.
“The bulls will challenge the $1,856 level. Once this level is breached, technical buying will begin to pick up.”
The latest position report from the CFTC seems to justify this statement. The latest data as of Dec. 1 shows.
Gold speculative long contracts increased by 4020 contracts to 324,344 contracts, with short positions declining slightly for the fourth consecutive week.
From a fundamental point of view, the key factors to continue to focus on this week are: the dollar, the progress of the economic stimulus bill and the new developments in the U.S. epidemic.
Crude oil outlook: increased production shortage has no power, oil prices continue to rise and rise?
Last week, the OPEC and non-OPEC ministerial joint statement said that since January 2021, member countries decided to voluntarily adjust the number of production cuts from 7.7 million barrels per day to 7.2 million barrels per day, that is, to increase production by 500,000 barrels per day.
However, this positive news failed to combat the rally in oil prices, WTI oil prices for five consecutive weeks to close gains, and held steady at $ 46. The CFTC position data as of December 1 also shows: New York crude oil speculative long position increased by 4190 hands to 677347 hands that week, the market continues to be bullish.
Goldman Sachs said that the impact of the gradual increase in oil production by OPEC+ members starting next month will be offset by increased demand from the vaccine good process. Goldman Sachs stated.
The fact that OPEC+ has cleared the way to exit the current production cuts in a coordinated manner and is focusing on increasing production and inventories strengthens our confidence in a stable and sustainable rise in oil prices through 2021. Goldman Sachs maintains its 12-month price forecast for Brent crude at $65/bbl.
However, the weekly chart shows that the rally in Brent crude oil has slowed down in the last week. The analysis pointed out that after a long period of continuous growth, oil prices may fall into a short-term consolidation range, investors need to be prepared for this period of consolidation.
Currency market outlook: U.S. refers to the technical rebound or now
The CFTC’s position report is consistent with the dollar’s decline last week, with the latest data as of December 1 showing that speculative short positions in the dollar increased by 16,159 contracts to 506,539 contracts. The willingness of investors to bearish on the dollar has increased.
The performance of the currency market this week will continue to be dominated by the movement of the dollar.
Analysts believe that in the short term, the dollar index is still oversold, but there may be some technical rebound in the downtrend, which may cause slight disruption to the current currency markets.
In addition, for the British pound and the euro, the latest developments in the Brexit negotiations and the European Central Bank interest rate decision still need to be followed.
On the Brexit front, it is clear that the two sides are still at an impasse.
According to The Times, British cabinet ministers have said that Prime Minister Johnson should seek a no-deal Brexit unless Brussels makes concessions.
According to the BBC, the EU and the U.K. are close to an agreement on fisheries. According to the French Sunday newspaper JDD, French European Affairs Minister Clement Beaune said France is prepared to veto a Brexit deal if it is not good enough.
On Monday evening, European Commission President Von der Leyen and Johnson will speak again, so investors can stay tuned.
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