Novosti i prognoe: devizno tržište od 28-12-2020

FXStreet reports that strategists at OCBC Bank expect the yellow metal to trade above $2,000 from Q2 onwards as markets divert their attention towards excess liquidity in a world that is on its way to being inoculated from the virus.

“While rising risk sentiment may prove to be an early headwind for gold’s allure as a safe-haven asset, the triple combination of a weak dollar, low yields and rising inflation expectations should continue to drive gold higher.” 

“We expect gold to continue rising through the year and trade above $2,000/oz from Q2 through Q4 2021.”

• The agreement could be struck during video-conference on Wednesday
• The deal is to give EU companies much better access to China's market and protection for their investments there 
• Better market access is something we have been working for for many years
• The Chinese have made quite big step towards us
• EC has all but finished negotiations, which were quite successful, especially when it comes to some difficult issues like labour rights

“You will see him invoking the Defense Production Act,” Dr. Celine Gounder, a member of Biden’s Covid-19 advisory board, told CNBC. “The idea there is to make sure the personal protective equipment, the test capacity and the raw materials for the vaccines are produced inadequate supply.”

According to CNBC, the Financial Times (FT) reported Sunday, citing UK's government officials, that the Medicines and Healthcare products Regulatory Agency (MHRA) would imminently approve the vaccine. The announcement reportedly could come as soon as Tuesday. Meanwhile, the Telegraph newspaper reported that the approval could come as early as Monday as health-care workers prepare to administer the shots. However, the U.K.’s Department of Health told Reuters the agency should be given time to properly assess the data from the vaccine’s trials. 

The AstraZeneca shot would likely be rolled out next week if approved in the next few days and would be added to the Pfizer/BioNTech vaccine.

USD fell against its major counterparts in the European session on Monday, as the EU-UK trade deal and  U.S. stimulus bolstered market sentiment. 

On Sunday, the U.S. President Trump signed a $900 billion stimulus and omnibus bill that funds the government through the end of the fiscal year next September, refusing from his last week's demands for larger, $2,000 aid checks. "I will sign the Omnibus and Covid package with a strong message that makes clear to Congress that wasteful items need to be removed. I will send back to Congress a redlined version, item by item, accompanied by the formal rescission request to Congress insisting that those funds be removed from the bill", Trump said in the statement. The market participants believe that the massive stimulus will help support the U.S. economy next year. The House is expected to vote today to increase stimulus checks to $2000, but it is not likely to receive the necessary support.

The UK and the EU reached a long-awaited deal on post-Brexit trade relations late last week. According to a spokesman for the German EU Presidency Sebastian Fischer, the Brexit deal got the green light earlier today as the EU ambassadors approved the provisional application of the EU-UK Trade and Cooperation Agreement as of January 1, 2021. The deadline for final adoption by use of written procedure by all 27 EU governments is 14:00 GMT on Tuesday, Fischer added.

• France reported 8,822 new coronavirus cases on Sunday, sharply up from Saturday’s 3,093

Global oil demand is still below 6-7 million bpd pre-crisis level

Expecting 5-6 million bpd of oil in additional demand next year

We aim to recover oil production as global oil market recovers

OPEC+ deal could be adjusted if oil market recovers quicker than expected

FXStreet notes that from last year’s social unrest to this year’s US-China tensions, both have sparked concerns about a potential capital exodus from Hong Kong from time to time. However, instead of capital flight, so far, markets have seen very strong capital inflows. Three factors including free capital flow, common law system and HKD/USD peg system have made it hard for global investors to give up on Hong Kong’s financial market. Since the USD/HKD peg system is likely to hold, HKD rates are expected to stay lower for longer in tandem with the US counterparts, per OCBC Bank. 

“We think there are three factors that make it hard to give up on Hong Kong’s financial market. First, the free capital flow. According to the Article 112 of the Basic Law, the Hong Kong dollar shall be freely convertible. This gives confidence to the investors who highly value the ease of funds repatriation. Second, the common law system. This system is applied in the other major financial markets such as the US, the UK, Singapore, Australia, New Zealand, etc. This reduces the investors’ concerns about the difficulty of resolving potential disputes. Third, the HKD/USD peg system. The currency peg system is transparent and stable and therefore allows investors to save on hedging costs."

“Should the Fed keep rates unchanged near zero before end-2023, the new era of low rates in the world including Hong Kong is likely to be prolonged too. This will therefore give a boost to the financial market as well as the residential property market in Hong Kong.” 

eFXdata reports that Societe Generale Research discusses its outlook for GBP.

"In real terms, sterling trades about 12% below its 27-year average, and 14% below its average level since the collapse of Bretton Woods. It's 8% above the all-time low. A persistent current account deficit and a collapse in the UK's pre-GFC relative rate advantage don't suggest a poor trade deal with the EU would get sterling out of its post-GFC range, but still struggle with the idea that it can trend lower and lower, even on no deal. If EUR/GBP breaks parity, it will only be sustainable if the ‘real' EUR/GBP rate is anchored by higher UK inflation. If taking all this to heart, we should expect GBP/USD to trade to the mid-1.40s next year IF there's a deal, and bounce after an initial fall to the mid 1.20s, if there isn't" ," SocGen notes.

Bloomberg reports that the U.K. expects to sign a continuity agreement with Turkey on Tuesday to roll over tariff-free trade arrangements worth 18.6 billion pounds last year.

“It will provide certainty for thousands of jobs across the U.K. in the manufacturing, automotive and steel industries,” Trade Secretary Liz Truss said in an email. “We now look forward to working with Turkey towards an ambitious tailor-made U.K.-Turkey trade agreement in the near future.”

FXStreet reports that strategists at OCBC Bank see copper testing a high of $8,800/mt at the end of the next year. 

“Copper demand may have yet to peak vis-à-vis steel, while supply also remains a big concern, given the concentration of production in South American economies.” 

“It remains a question mark if the under-investment in copper mine CAPEX could impede mining output beyond 2021.” 

“We think copper may peak at $8,800/mt by end 2021.”

Reuters reports that China’s state planner expanded the list of industries in which it will seek to encourage foreign investment, with the total number of areas rising to 1,235 compared with 1,108 in the previous list.

China will seek to attract foreign investment in advanced manufacturing including artificial intelligence, semiconductors and 5G-related technology development, according to a statement posted on the website of the National Development and Reform Commission.

FXStreet reports that economists at OCBC Bank discuss the prospects for Brent.

“The demand recovery path is not expected to be linear, with the on-off risks of travel restrictions and vaccine manufacturing infrastructure likely to dominate the landscape in early 2021.”

“Supply will likely outstrip demand in Q1 till mid-Q2 and Brent may search for a bottom at $45/bbl. From late Q2 on, we expect the wide distribution of a vaccine to lift fundamental demand, resulting in a supply deficit and lifting Brent to $55/bbl by year-end.”

Reuters reports that cabinet office minister Michael Gove said that most British businesses have made preparations for the end of the Brexit transition period. Gove added that it was important they were ready for changes to trading and regulatory rules.

Asked if businesses were ready for the end of the transition period on Dec. 31, when Britain finally leaves the European Union's customs union and single market, Gove said: "Yes. The overwhelming majority of businesses have been getting ready, absolutely."

RTTNews reports that data released by the statistical office INE showed that Spain retail sales declined at a faster pace in November.

Retail sales decreased 4.3 percent on a yearly basis in November, which was bigger than the 3 percent decline logged in October.

Similarly, on an unadjusted basis, the annual decline in retail sales deepened to 5.8 percent from 2.3 percent a month ago.

Month-on-month, retail sales dropped 0.8 percent, in contrast to a 0.1 percent rise in October. The monthly fall was driven by weak demand for non-food products.

FXStreet reports that according to economists at TD Securities, GBP/USD still looks capped around current levels.

“The UK and EU have confirmed they have reached a deal on the goods trade, so as of January 1st, the UK is outside of the EU customs union and single market and will begin to negotiate new bilateral trade agreements with other nations. While this does now provide for zero-tariff trade, firms will need to adjust to the specific rules of origin requirements to take advantage of that.”

“We do not see this as any game-changer for markets. A deal was in the price and the specifics are unlikely to have any bearing on the direction of markets from here. While GBP is very cheap across many of our valuation models and much of the negotiation-linked uncertainty can fade, there is still significant economic underperformance and disruptions to follow early in 2021.”

“We start the year looking to sell GBP on rallies, especially on the non-USD crosses.”

During today's Asian trading, the US dollar fell against the euro and was almost unchanged against the yen.

The decline in demand for safe haven assets is due to the news about the signing of the country's budget by US President Donald Trump, which includes a $900 billion stimulus package, as well as the achievement of an agreement between London and Brussels and the prospects for economic recovery in 2021.

The ICE index, which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell by 0.27%. 

Pound rose moderately against the dollar. The European Parliament will today begin consideration of the agreement on the relationship between the UK and the EU after Brexit, the text of which was agreed last week. Last week, the European Parliament said it would make a decision on the agreement next year.

Meeting in Brussels on Friday, the Committee of permanent representatives (Coreper) of the EU countries approved a letter to the European Parliament that the EU Council will decide on the temporary validity of the EU agreement with the UK, Coreper spokesman Sebastian Fischer said.

FXStreet reports that economists at OCBC Bank expect the Chinese yuan to remain supported in the next year.

“The strong RMB was mainly attributable to three factors including China’s first in first out recovery, the widening current account surplus and favorable yield differential between China and US. We expect those factors will continue to underpin CNY in 2021.” 

“Given China’s increasing focus on independence of monetary policy, it will gradually loosen its tight control on currency volatility. This means that China will have higher tolerance for the possible overshoot of CNY in the near-term. For the USD/CNY, we think it may test 6.30 in 2021.”

eFXdata reports that ANZ Research discusses its outlook for the BoJ policy trajectory in 2021.

"The BoJ continues to stand ready to do more if needed, but it hasn’t made any notable adjustment for some time. The BoJ recently offered 0.1% interest on some of its reserves to regional banks that made decisions to merge and/or demonstrated cost savings," ANZ notes. 

"The move reflects growing concern over the health of regional banks after a prolonged period of negative rates and a very flat yield curve. Governor Kuroda has played down the significance of the move for monetary policy. He says the adjustment is needed for prudential reasons. This possibly keeps the door open to take rates deeper into negative territory if the currency appreciates sharply," ANZ adds.

RTTNews reports that data released by the National Bureau of Statistics showed that China's industrial profits logged a double-digit annual growth in November, but the pace of growth moderated notably.

Industrial profits increased 15.5 percent on a yearly basis in November, following a 28.2 percent surge posted in October.

The statistical office said that the slowdown in November was largely driven by a higher base compared with October.

During the January to November period, profits of industrial firms climbed 2.4 percent from the same period last year.

CNBC reports that President Donald Trump signed a massive coronavirus relief and government funding package into law Sunday, days after he sent Washington into a panic by suggesting he could veto the bill.

The measure extends the expanded jobless benefits into March, but millions are expected to lose a week of benefits covering these people due to Trump’s delay in signing the bill. Unemployed Americans eligible to receive a $300 weekly supplement will also get the additional money later than they could have.

The government would have shut down Tuesday during a deadly pandemic if Trump did not approve the legislation.

After Trump expressed support for larger checks, Democrats embraced his stance. The Democratic-held House plans to vote on a measure to increase the payments to $2,000 on Monday.

In a statement Sunday night, Trump said the Senate would also “start the process for a vote that increases checks to $2,000.” Senate Majority Leader Mitch McConnell, in a separate statement cheering the bill becoming law, did not mention any plans to take up the legislation if the House passes it. Most members of the Kentucky Republican’s caucus have opposed larger direct payments.

EUR/USD

Resistance levels (open interest**, contracts)

$1.2296 (1447)

$1.2269 (1293)

$1.2234 (1375)

Price at time of writing this review: $1.2218

Support levels (open interest**, contracts):

$1.2142 (3535)

$1.2113 (2260)

$1.2077 (4841)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 8 is 77876 contracts (according to data from December, 24) with the maximum number of contracts with strike price $1,2100 (4841);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3743 (2177)

$1.3681 (1012)

$1.3635 (1222)

Price at time of writing this review: $1.3571

Support levels (open interest**, contracts):

$1.3417 (783)

$1.3385 (829)

$1.3350 (734)

Comments:

- Overall open interest on the CALL options with the expiration date January, 8 is 58637 contracts, with the maximum number of contracts with strike price $1,4000 (33134);

- Overall open interest on the PUT options with the expiration date January, 8 is 29623 contracts, with the maximum number of contracts with strike price $1,2800 (2938);

- The ratio of PUT/CALL was 0.51 versus 0.49 from the previous trading day according to data from December, 24

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.