[Market Review].
The U.S. dollar index oscillated to the downside. On the matter of the $2,000 check proposal, U.S. Senate Republican Leader Mitch McConnell again raised opposition. However, the market is still optimistic about the further introduction of stimulus measures. Commonwealth Bank of Australia strategists said that as several countries launched new crown vaccinations and the U.S. offered more fiscal support, reducing the downside risk to the global economy and boosting risk sentiment. That was a drag on the dollar.
Gold jumped $16. Next, let’s focus on gold. Gold prices jumped $16 during the day, hitting a high of $1,896. The prospect of fiscal stimulus pushed the dollar to its lowest level in more than two years, supporting gold. However, the global rollout of the new crown vaccine and increased risk appetite limited gold’s gains.
Silver continued to climb. Gold continued to move higher, as did silver. Silver prices climbed all the way from $26.1 to near $26.6 during the day, up more than 1.6%.
The trade deal was signed by the heads of the UK and Europe. In the UK, the British House of Commons successfully passed the UK-EU trade deal with a huge margin of 448 votes. The House of Lords will then vote on the agreement. At the same time, the head of the EU and British Prime Minister Johnson also signed the UK-EU trade agreement. In other words, the agreement will be implemented on a provisional basis from January 1, 2021.
The British pound soared by 100 points. We also need to pay attention to the urgent approval of the new crown vaccine developed by Oxford University and AstraZeneca in the UK against the backdrop of a sharp rise in the number of confirmed cases of new crowns. It is reported that the UK has ordered 100 million doses of the vaccine from AstraZeneca, enough to vaccinate 50 million people. The pound surged a hundred points against the dollar during the day, influenced by the approval of the vaccine for the market, the successful signing of the UK-EU trade agreement, and the pressure on the dollar.
The euro oscillated to the upside. Likewise, the euro also saw big gains, benefiting from a weaker dollar and a smooth Brexit. The euro oscillated upward against the dollar, gaining more than 40 points during the day.
EIA crude oil inventories unexpectedly fell sharply. Finally, a look at the oil market. U.S. EIA crude oil inventories recorded a decline of 6.065 million barrels, a much larger drop than expected, and U.S. oil rose above $48.6 at one point. With the drop in inventories and a rebound in U.S. crude demand, market fears that a resumption of production increases by OPEC+ early next year could lead to an imbalance in the oil market have eased. OPEC+ will meet next week to decide on February production levels. We can focus on that.
▼Bond Market
Overnight, the yield on China’s 10-year Treasury note fell 0.56 percent, while the yield on the U.S. 10-year Treasury note fell 0.92 percent and the yield on the U.S. 3-month Treasury note fell 18.63 percent.
▼On the stock market
U.S. stocks closed in unison, with the S&P 500 up 0.13%, the Nasdaq up 0.15% and the Dow Jones up 0.24%; by this morning, Chinese stocks opened in the red, with the Shanghai Composite Index up 0.15%, the Growth Enterprise Market Index up 0.37% and Hong Kong’s Hang Seng Index up 0.18%.
[Risk Warning].
U.S. dollar: multiple factors weighing on the dollar fears weakness
Investors believe that the U.S. economy will not grow as much as countries like the European Union in 2021, and the dollar will be affected by growing fiscal and current account deficits as governments increase spending. The Commonwealth Bank of Australia said the launch of new crown vaccinations in several countries and the offering of more fiscal support from the U.S. have reduced the downside risk to the global economy. This remains a drag on the dollar.
Japanese Yen: U.S. bailout check plan blocked U.S. Japanese under pressure in the middle of the 103 range
Some analysts said the U.S. Senate Majority Leader Mitch McConnell’s blockage of the $2,000 bailout check plan and market concerns about a new strain of the New Coronavirus weighed on the dollar against the yen. Unless the dollar breaks through the 21-day SMA level of 103.78 against the yen, it may hit 102.87 again.
Gold: U.S. bond yields are expected to move down Gold may break 2000 again
Analysts at BNP Paribas predict that gold will break through $2,000 again in 2021 and top out in the second quarter, driven by U.S. bond yields set to fall into negative territory, with an expected average price of $2,010 in the second quarter of 2021. However, it is important to note that the market is expected to shift to risky assets in the third quarter of 2021, and gold prices will gradually fall back then, with an average price of $1,945 per ounce expected for the whole year of 2021.
[Key Forecast].
21:30 U.S. initial claims may remain at a high level
Recently, there has been no significant reduction in the number of confirmed cases of new crowns in the United States, which has weighed on the labor market. In the last three weeks, the number of U.S. initial claims released is back above 800,000, with 803,000 recorded last week. Some agencies commented that the data was better than expected, but the number of jobless claims remained at a high level of 800,000. Unemployment numbers are still up as more businesses face restrictions and consumers remain cautious amid a surge in new cases of coronary pneumonia.
Currently, the market expects that the number of initial jobless claims in the U.S. for the week to December 26 will be 833,000. 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.
In the case that the epidemic in the United States has not significantly improved, as well as the vaccine has not yet been widely vaccinated, this data will remain at a high level, and the dollar index is difficult to get support.
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