[Market Review].
U.S. bond yields are hovering high. on February 5, the U.S. House and Senate passed the fiscal year 2021 budget resolution, clearing the way for Biden‘s proposed $1.9 trillion stimulus bill to land. Previously, the market expected the size of the stimulus bill to be around $1.3 trillion. The stimulus scale exceeded expectations, coupled with the Federal Reserve and the European Central Bank repeatedly stressed the importance of financial assistance and monetary easing has not yet come to exit, risk appetite rose, triggering global stock markets and commodities to rise, while U.S. bond yields also continued to climb and are still hovering above 1.2%. For now, Biden has not set a clear deadline for passage of the stimulus bill, but some progress has been made. Recently, U.S. House Democrats released the first draft text of key elements of the stimulus bill. House Majority Leader Hoyer said the House will vote on the stimulus bill on Feb. 22. House Speaker Pelosi previously expressed confidence that the bill would become law in mid-March. We can keep an eye on the progress of the stimulus bill.
The dollar index is shaking higher. U.S. bond yields are hovering high, supporting the dollar. In addition, U.S. retail sales recorded a monthly rate of 5.3% in January, a record high since June last year and well above the expected 1%. And PPI and industrial output data, released on the same day, both exceeded expectations. This suggests that the economy is gaining momentum in its recovery from the Epidemic-induced recession as vaccinations make progress. This pushed the dollar stronger. The U.S. dollar index oscillated higher during the day, hitting a high of 91.06.
Gold prices continued to set new lows. Rising U.S. bond yields and a stronger dollar are both detrimental to gold prices. In addition, the analysis pointed out that the global epidemic has recently tended to ease, and the prospect of accelerated vaccination progress, are seriously depressing the safe-haven buying demand for gold. Gold prices fell for a fifth consecutive day and continued to set new lows at $1,769.42 an ounce.
Silver was flat. Next, let’s look at silver. Like gold, silver’s performance was also relatively flat. The silver price oscillated narrowly between $26.8 and $27.4 during the day and rose slightly during the day, currently trading near $27.3 per ounce.
The euro nearly broke 1.20. non-US currencies, the euro against the dollar shocks down during the day, from 1.21 all the way down, the lowest touched 1.2023, nearly broke 1.20. dollar strength, weighed on the euro. Although recent data show that the eurozone economy tends to improve, but the market is still concerned about the growth of the latter will run behind the United States. In addition, because the EU countries vaccination progress is slower than the U.S. and Britain, the euro is therefore under additional pressure.
The British pound shocks down. Like the euro, the pound also saw declines. The pound fell slightly against the dollar, but the overall momentum remained up. Some analysts say that the British epidemic is improving, coupled with the successful vaccination, the pound is still expected to strengthen.
U.S. oil stabilized at the $60 mark. Oil market. Earlier, the U.S. energy crisis due to the intensification of the storm, stimulating the U.S. oil on the $ 61 mark. According to traders and industry executives, total U.S. oil production plunged by a record nearly 40 percent as unprecedented cold weather froze oil well operations in the central United States. However, according to the Wall Street Journal, Saudi Arabia will boost oil production as oil prices rebound, planning to increase production in the coming months to reverse January’s big cut and increase production by up to 1 million barrels of oil per day. Oil prices fell in response, with U.S. oil dropping $1 in the short term to below $60 before returning to above $60. Before the news came out in the foreign media, the Saudi oil minister said he hoped the oil market would not be complacent and that it was too early to declare victory over the virus. It seems that the Saudi official stance is still cautious.
Bitcoin breaks the 52,000 mark. Finally, a look at bitcoin. Bitcoin has continued to move higher during the day, taking down several levels in quick succession, and is now on the 52,000 mark, up as much as 4% during the day. According to foreign media, tesla‘s previous announcement of adding $1.5 billion in bitcoin to its balance sheet has been the most obvious catalyst in recent days, leading to a 16% rise in bitcoin prices on Feb. 8, the largest single-day gain since the new crown epidemic sparked financial market turmoil last March. Tesla also said it will soon begin accepting payments for Tesla cars via Bitcoin.
[Risk Warning].
JPY: US-JPY rally unchanged Resistance at 106.35
UOB believes that the USDJPY uptrend is intact and will test 106.70 again in the coming weeks. USDJPY has recently surged strongly, but a sustained rise above 106.35 is unlikely, with the next resistance at 106.70 and, on the downside, support at 105.65.
British pound: the economic outlook is becoming more optimistic The pound is expected to gradually move up
Wells Fargo Securities noted that the U.K. economy was better than expected in the fourth quarter of 2020, but the country’s economy’s near-term outlook remains challenging as the U.K. reimposed an epidemic embargo. However, the U.K. government has pledged to gradually ease the embargo, and the medium- to long-term economic outlook is more encouraging as the financial situation of U.K. households continues to improve. Because the pound has reached its period target of 1.38, a period of pullback is likely, but gradual gains are still expected in the medium term.
New Zealand dollar: New Zealand dollar short-term temporary retracement of the upper target 0.7250
ANZ Bank said the New Zealand dollar touched a six-week high against the U.S. dollar on Tuesday, driven by rising U.S. Treasury yields, the U.S. dollar index rebounded in late trading, dragging the New Zealand dollar lower against the U.S. dollar. Nevertheless, the overall situation remains positive, with higher milk prices and rising New Zealand Treasury yields, which means the New Zealand dollar is expected to strengthen. Technically speaking, NZDUSD support is at 0.71 and resistance is at 0.7250.
[Key Forecast].
20:30 ECB to emphasize maintaining accommodative policy
In late January, the ECB left three key interest rates unchanged, saying that quantitative easing will continue until shortly before it starts raising rates. The central bank maintained the scale of debt purchases of 20 billion euros per month until at least the end of March 2022; if conditions permit, the scale of emergency debt purchases do not need to be used in full. This is the latest statement of the ECB on the scale of emergency protest bond purchases. In addition, the ECB will provide sufficient liquidity to the market through targeted long-term refinancing operations. Taken together, the ECB minutes will emphasize maintaining an accommodative monetary policy and will also adjust all tools appropriately according to the situation. Just keep an eye on it, folks.
21:30 U.S. initial claims may gradually decrease
Next, let’s take a look at the initial jobless claims that will be released in the US. In the last two weeks, the number of initial claims released in the United States remained below 800,000, and the data released last week was 793,000. Some agencies commented that the number of first-Time claims for unemployment benefits increased slightly in the week of February 6, in line with the stagnation of the job market recovery. The Federal Reserve also acknowledged that the pause in improving labor market conditions over the past few months was largely dragged down by the resurgence of the epidemic, and that other consumer-facing businesses such as restaurants are coming under pressure. However, new confirmed cases in the United States have fallen sharply, and the current number of confirmed cases in a single day has slipped below 100,000, which means that the labor market will improve significantly.
Currently, the market expects that the initial jobless claims for the week of February 13 will be 765,000. If the published value is much higher than expected, the dollar index may come under pressure; conversely, if the published value is less than expected, the dollar index may strengthen.
Currently, the U.S. vaccination situation is optimistic, with more than 50 million doses administered as of Feb. 16 EST, according to the latest data from Johns Hopkins University. This will be reflected in the labor market, which in turn will support the dollar.
Friday 00:00 EIA Crude Oil inventories may drop big
Finally, let’s focus on EIA crude oil inventories. Last week’s release of EIA crude oil inventories fell by a massive 6.664 million barrels, recording a decline for the third consecutive week. Financial blog Zero Hedge commented that oil prices and drilling numbers have increased recently, but crude oil production has declined slightly, indicating some self-discipline in capital spending by drilling companies. Crude oil supplies will be impacted by the recent unprecedented cold snap that has seen temperatures plummet across much of the U.S., forcing millions of homes in Texas to lose power on a rotating basis for the first time in a decade, and several U.S. energy companies to shut down equipment.
This morning, API crude oil inventories have been released, down 5.8 million barrels. Based on past experience, API inventory data and EIA inventory data have a relatively strong positive correlation, so EIA crude oil inventories may also decrease.
Even so, it should be noted that the current market expects that the EIA crude oil inventory may decrease by 2.175 million barrels in the week of February 11. If the published data exceeds expectations, oil prices may dip in the short term; if the inventory data is less than expected, oil prices are expected to strengthen.
Also note that yesterday the media said that Saudi Arabia may announce the withdrawal of voluntary production cuts at the OPEC+ meeting on March 4, and raise oil production as early as April in the event of a recovery in oil prices. 1 million barrels per day of voluntary production cuts were made in February and March, and oil prices may come under pressure in the short term if news of Saudi Arabia’s withdrawal of production cuts is implemented.
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