Close: London Session | Forex, Metals, Oil, Agriculture January 19, 2021



With cheap money, weak dollar and low US real yields, precious metals are unlikely to see any major correction anytime soon. In FX the story remains status quo with investors still bearish on the dollar as risk flows continue to be the dominant theme. The State Administration for Market Regulation’s (SAMR) green light brings the $4.5 billion dollar deal to a close after approval from other countries including the United States. However, it’s sustainability depends on low interest rates which depend on low inflation which depends on a stable dollar.
EU eyes dollar’s global dominance in bid to bolster the euro. The dollar was weaker on same risk flows with EURUSD up about 40 basis points and cable up 33 pips. If the US dollar bounce is over, it could fuel a continuous rally in emerging markets. Now, having seen off existential crises during its two-decade history, the euro is the subject of new plans to strengthen its international role.


Gold markets pulled back a bit during relatively thin trading on Monday due to the Martin Luther King, Jr. holiday. S&P 500 futures pointed to plenty of green at the open, the 10-year Treasury yield was at 1.118%, oil held above $52 a barrel and gold gained. Gold markets have been battered as of late, but so far, we have been respecting the 200-day EMA as seen back in November. Also, tighter lending restrictions for the property sector in China will weigh on steel and copper demand.
Iron ore ($170/t) and steel (HR coil over $1,000/t) have not lagged behind in price rally. Copper has breached the psychological $8,000 a tonne.


Oil climbed on optimism that government stimulus will eventually lift global economic growth and oil demand. Like other paint companies, the fall in crude oil prices helped Indigo well in the first half of this year. WTI crude oil prices posted a rebound following the declines from last week. The crude oil market is most likely to remain in deficit this year especially with OPEC+ output cut. This will mark a correction in crude oil prices which has been in a steady trend for a while.
Norway, which began to extract oil and gas from its offshore continental shelf 50 years ago, believes it has still only pumped about half of its available resources. This also indicates that the company is more sensitive to crude oil price changes. The immediate downside target for oil prices is the 49.00 area. Establishing support there could potentially mark a correction into the longer-term uptrend that oil prices are in currently. Known locally as the CRE, the regulator oversees retail fuel stations, transport and storage of natural gas and other petroleum products, as well as issues related to electricity generation.

United States

The Fed’s intervention, which included cutting interest rates and buying billions of dollars worth of bonds, helped fuel a recovery. The Federal Reserve buying bonds represents a swap of long-term government liabilities (Treasuries) for short-term government liabilities (reserves held at the Fed). Spending on the border wall will stop, taxes will increase on higher earners and corporations, and it looks like Wall Street regulation will get tougher.
Paid Post There’s a reason over 2.5 million people start their day with Morning Brew the daily email that delivers the latest news from Wall Street to Silicon Valley. President-elect Joe Biden is promising a major revamp of the shambolic program he inherits tomorrow from Donald Trump, with only about 15 million inoculations having been administered so far. Trump isn’t expected to pardon himself, family or close aides. It doesn’t matter whether the Fed is buying bonds or shrinking the balance sheet.
Now Wall Street economists are projecting a pickup in economic growth later in 2021 as vaccination efforts accelerate. While Wall Street earnings will dominate the early running, after the close Netflix Inc. will report. Hours left President Donald Trump will depart Washington tomorrow morning before the inauguration of Joe Biden to begin his life as an ex-president at his Mar-a-Lago resort in Florida.


In other news, Boeing’s 737 MAX airliner will receive final clearance to resume flying in Europe next week, the head of the EU’s air safety watchdog said. As EU countries top 1% of the population vaccinated, the UK is at almost 7% and is vaccinating nearly 0.4% per day recently.