[Market Review].
The US dollar index rose and then fell during the week. Last night, the U.S. released initial jobless claims recorded 861,000, well above the expected 765,000. This indicates that the recovery in the U.S. job market is still not as good as it should be. The day before, the minutes of the Federal Reserve’s monetary policy meeting showed that the Fed is determined to continue supporting the economic recovery. U.S. policymakers, who are debating the $1.9 trillion stimulus bill, are also paying close attention to the employment data. Earlier, the U.S. stimulus bill is expected to boost the Inflation reflation trade, 10-year U.S. bond yields once spiked above 1.3% for the first Time in nearly a year. Higher U.S. bond yields boosted the dollar. The dollar index advanced above the 91 mark at one point this week. However, in the second half of the week, the dollar’s upward momentum is not too strong, currently hovering around 90.5.
Gold plunged $60 this week. Against the backdrop of high U.S. bond yields and the U.S. dollar, gold suffered a sharp drop this week, falling nearly $60 from $1,820 all the way down to near $1,760.
Silver had a gloomy week. Gold was gloomy, as was silver. This week, silver prices once approached $28 on the upside, but then lacked upward momentum. By this morning, it had even touched the $26 mark on the way down.
The euro has been relatively weak this week. Non-U.S. currencies. The euro fell and then rose against the dollar this week, hitting a low of 1.2023. However, overall, the pair is still down more than 30 points. The euro was relatively weak against the backdrop of the dollar remaining strong and the ECB maintaining easing.
The British pound surged by more than 130 points during the week. Likewise, the British pound moved down and then up this week. However, relative to the euro, the second half of the pound up momentum is more powerful. In aggregate, the pound rose more than 130 points against the dollar during the week. This was due to the progress in vaccination for the new crown in the UK. The UK has administered the first dose of vaccine to 15.6 million people this week, leading most countries in vaccination pace. The good pace of vaccination in the UK has accelerated expectations of a recovery in the UK economy. In addition, the prospect of negative Bank of England interest rates falling further has boosted the pound.
U.S. oil rose and then fell this week. Finally, a look at the oil market. U.S. oil was up and then down this week and is currently trading near $60. U.S. EIA Crude Oil inventories recorded a significant decrease of 7.258 million barrels, compared to the previous forecast of a decrease of 2.249 million barrels. Despite this, oil prices saw a decline. While the rare cold weather caused U.S. oil production to plunge nearly 40%, oil demand from refineries is expected to remain weak as it will take some time for refineries along the Gulf Coast to make repairs and restart production after the harsh cold weather caused many production problems. Currently, we are facing a situation where refining capacity and oil production are both down, so there is no particular supply pressure, said the head of commodity strategy at TD Securities.
[Risk Warning
GBP: If consumer confidence strengthens, GBPUSD will break 1.4
The Bank of England reiterated its expectation of a consumer-led economic recovery, which is driven by the large savings accumulated during the past year’s blockade. While there has been a clear rebound in some activity surveys, other business and confidence surveys have struggled to rebound. This discrepancy suggests that the prolonged embargo has limited confidence. Westpac believes that if subsequent consumer confidence is expected to strengthen, the pound will break out of the current 1.3750-1.4 range against the dollar.
Euro: the U.S. economy or recovery, the euro fears a dip to 1.16
Some analysts believe that the U.S. is likely to recover from the second half of 2021 and achieve a full recovery by the end of the year. The Federal Reserve has begun to discuss when or whether to end asset purchases. Meanwhile, the European Central Bank is unlikely to change its monetary policy. Against this backdrop, the euro is expected to reach 1.22 against the dollar in one to three months, with a possible dip to 1.16 in twelve months.
Bitcoin: Bitcoin still has room to rise, with long-side concerns at $54,500
Institutional analysis suggests that bitcoin still has room to rise despite having broken above its record high of $52,567 earlier on Thursday. Bitcoin maintained the previous day’s upside breakout at a key short-term resistance line while extending its Nov. 26, 2020-Jan. 8, 2021 rally beyond the 61.8% Fibonacci extension position with $54,500 as the next target.
[Key Outlook].
TBD Biden may say U.S. back to normal in fall
Biden will hold his first meeting with G-7 leaders to discuss the new crown Epidemic, the global economy and other issues. As vaccination continues, the number of new confirmed diagnoses in the U.S. is rapidly declining, with new data below 70,000 on the 18th. However, the number of new U.S. crown deaths has soared to more than 400,000. Biden predicts that the death toll could reach 500,000 in the coming month. But the epidemic will improve as vaccinations continue.
Of the roughly 331 million Americans, about 40 million have received at least their first dose of Pfizer or Modena’s New Crown vaccine, and 15.4 million of them have received a second dose, according to the Centers for Disease Control and Prevention. Biden, for his part, said he would give the U.S. enough vaccine to cover every American adult by the end of July. Fauci, a leading U.S. expert on infectious diseases, expects that most people in the United States are expected to be vaccinated by early summer. If vaccinations go well, the U.S. could return to some degree of normalcy in the fall.
This means that the U.S. economy will gradually recover. Many institutions are currently confident that the U.S. economy will recover, with Goldman Sachs forecasting U.S. GDP growth of 6.8% in 2021. Jefferies’ economists forecast 6.4%. But the Federal Reserve is relatively cautious, with a forecast of 4.2 percent.
On balance, Biden may emphasize that vaccinations will be advanced, the U.S. is expected to return to some degree of normalcy in the fall, and the economy will grow rapidly. If Biden’s expectations for the economic outlook are optimistic, the dollar index may gain support.
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