[Market Review]
The British pound is jumping up and down. Yesterday, before the U.S. stock market, the Brexit negotiations showed sudden progress, and at one point, the pound quickly rallied nearly 100 points against the dollar. The British government released a statement saying that it had reached agreement with the EU on the remaining issues related to Northern Ireland, meaning that some of the provisions of the Internal Market Act that gave British ministers the power to unilaterally overturn the Brexit deal would no longer be needed. In addition, British Prime Minister Johnson will travel to Brussels later today to meet with European Commission President Von der Leyen on Brexit issues. However, Johnson “poured cold water” on the media before the trip, warning that despite his high hopes for a trade deal, the negotiations will be “very tricky. A spokesman for the European Commission denied that Wednesday was the deadline for negotiations, saying he hoped the meeting between Johnson and von der Leyen would pave the way for subsequent negotiations.
The euro rose and then fell. News of the UK-EU negotiations also added to the euro’s volatility, with the euro rising and then falling against the dollar. Investors are also full of anticipation and anxiety about this week’s ECB interest rate decision, and before the news settles, the upside of the euro will be further limited, and the support level below 1.2011 may be tested again.
Stimulus talks in the US are progressing. Next, let’s focus on the news from the United States. U.S. Treasury Secretary Mnuchin said that he proposed a new $916 billion anti-epidemic relief package to Speaker of the House Pelosi. And Senate Majority Leader Mitch McConnell also agreed to the aid package. This indicates that progress is being made in the negotiations. Currently, the dollar index is holding steady around the 90 mark, and investors are assessing the impact of the stimulus package and the epidemic on the dollar.
Trump signs executive order on national vaccination priorities. Real-time statistics show that more than 15 million cases of new coronary pneumonia have been diagnosed in the United States. Trump has signed an executive order to give US citizens priority vaccination rights. The US Food and Drug Administration (FDA) has stated that Pfizer’s new Coronavirus vaccine meets eligibility standards. The official said that the vaccination will be initiated within 96 hours of the FDA’s license.
Gold prices continue to climb. The market’s expectation of a new round of economic stimulus program in the United States, coupled with the decline in U.S. bond yields, gold received some support and continued to close higher after the previous day’s surge. However, the Bank of Montreal, Canada, said that after the recent strong performance, gold prices may still need to be supported by some additional factors in order to continue to move upward.
Silver highs and lows. Silver’s trend is roughly similar to that of gold. After the previous day’s big rally, silver was highly volatile during the day in the $24.4-$24.8 range.
Bitcoin pierced the 18100 level. Let’s look at Bitcoin again. Bitcoin has been volatile during the day, and this morning it pierced the $18,100 barrier.
U.S. oil prices were little changed. Finally, let’s take a look at the oil market. Crude oil prices were little changed, with U.S. oil trading in a narrow range around $45 during the day. The market is weighing the demand risks associated with increasing cases of new coronary infections, while at the same time expecting more stimulus measures and the introduction of vaccines. Data released this morning showed that API crude oil inventories rose by 1.141 million barrels, which put some pressure on oil prices.
In the bond market
Overnight, the yield on China’s 10-year Treasury note fell by 0.36%, the yield on the US 10-year Treasury note fell by 0.67%, and the yield on the US 3-month Treasury note fell by 6.35%.
In the stock market
U.S. stocks closed together rose, the S&P 500 index rose 0.28%, the Nasdaq rose 0.5%, the Dow Jones index rose 0.35%; to this morning, the Chinese stock market opened in the red, the Shanghai Composite Index rose 0.17%, the ChiNext index rose 0.22%, Hong Kong’s Hang Seng index rose 0.78%.
[Key Outlook]
British Pound: Agreement Expected Between UK and Europe, Citi Suggests Buying Pound at Low Prices
Citi expects the UK and Europe to reach a trade deal, staying bullish on sterling. Citi’s strategy department will buy the pound on the dips, but needs to be wary of buying expectations and selling facts. On the downside, 1.33 needs to be watched, and then down to 1.32. Below this is strong support at 1.3070-80, followed by the 1.30 level at the intersection of the 55-day and 100-day moving averages. The bank notes that flows are on the rise and are 20% above average. Banks and leveraged trading institutions are net buyers of the pound on the platform.
Euro: European Economy Continues to Suffer, TD Securities Wants to Short the Euro
TD Securities says it will short EURUSD around 1.2165 with a price target of 1.18 and a stop loss at 1.2450. The eurozone economy continues to suffer, so the firm believes it will be difficult for the euro to move up further. TD Securities is also short EURUSD in its model portfolio.
Gold: Gold looking for short-term equilibrium point, gold price remains bullish
Bank of Montreal, Canada, noted that the volatile movement in the gold price indicates that the market is trying to find a short-term equilibrium. For now the market remains bullish, especially after recovering the 1850 level, where volatility has become more volatile and buying has become more active. In addition, some strategists say that once the U.S. stimulus bill is passed, or once clearer details of the bill’s progress become available, the price of gold is expected to continue to move higher.
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