Daily Market Analysis from ForexMart

Brent. December 29, 2020 – Oil market demonstrates growth in the pre-New Year week

Oil prices are steadily growing during trading on Tuesday amid growing investor appetite for risky assets. A strengthening factor was the adoption of new stimulating measures in the United States. The cost of February futures for Brent rose to $51.65 per barrel, while the price of WTI reached $48.30 per barrel.

On Monday, the House of Representatives of Congress approved an increase in stimulus payments from $600 to $2,000 at the request of Donald Trump. Moreover, on Sunday, Trump signed the country's fiscal 2021 budget of $2.3 trillion. It is noted that the budget includes a package of measures to support the economy in a pandemic in the amount of $900 billion.

In addition, the general weakness of the US dollar also supports oil prices. However, experts believe that the growth of the oil market may be suspended due to concerns about a new strain of coronavirus and imposed restrictions on the movement of people between countries.

EUR/USD. December 30, 2020 – Dollar has updated two-year lows

On Wednesday, the dollar renewed multi-year lows in pairs with many currencies: paired with the euro, the dollar reached its lowest level in two years at around 1.2300. The pressure on the greenback was put on by the postponement of the immediate consideration of raising household payments to $2,000.

The dollar index fell to 89.711 against a basket of six major currencies, its lowest level in more than two years.

Earlier, the dollar also showed a decline, and risky assets – growth. The reason was the signing by Donald Trump of a bill to help the population and economy in the fight against coronavirus. And while the payout remains uncertain, many analysts predict that the US currency could weaken further next year, as newly elected US President Joe Biden is expected to push for even greater economic support.

Another negative factor for the dollar is the expectation that the US Federal Reserve will keep interest rates low for a very long time.

Brent. December 31, 2020 – What awaits the oil market in 2021?

In April 2020, Brent crude hit multi-year lows, falling to $16 a barrel amid the onset of the Covid-19 pandemic and the price war between Russia and Saudi Arabia. At the same time, the price for American WTI crude oil fell into the area of ​​negative values.

Experts note that the consumption of crude oil and liquid fuels in the world for the year decreased by 9% (from 101 million barrels per day in 2019 to 92.4 million barrels). However, an agreement to cut oil production under OPEC + allowed oil to recoup most of the losses by the end of 2020. Today Brent quotes are holding at $51.50 per barrel.

However, it is possible that at the beginning of 2021, quotations may again fall to $30 per barrel amid the announcement of new lockdowns in many countries due to the further spread of coronavirus in the world. But, nevertheless, the market is now dominated by optimism. Analysts still expect the global economy to recover next year, which can support the demand for commodities. The oil price range is expected to be in the range of $40-65 per barrel over the next year.

On the last day of the outgoing year, Brent quotes settled at $51.40 per barrel.

EUR/USD. January 04, 2021 – Dollar falls against most currencies

At the beginning of the first trading week of the new year, the US dollar depreciates against many competing currencies. In a pair with the euro, the greenback fell again to the level of 1.2300. The US currency is under pressure from growing appetite for risky assets amid continued optimism about the global economic recovery in 2021.

The incidence of coronavirus in the world and the beginning of vaccination of the population in many countries remain the main topics of discussion by analysts. Bloomberg experts note that without widespread vaccine distribution, the dynamics of the foreign exchange market will strongly depend on the dynamics of the spread of Covid.

The economic calendar for today is not very diverse. Germany presented data on the index of business activity in the manufacturing sector: the indicator came out worse than expected (58.3 against expectations of 58.6 points). A similar release of data from the euro area also reflected a decrease in the indicator: from 55.5 to 55.2 points.

But the business activity index in the UK came out better than expected: the index rose to 57.5 (forecast 57.3 points). In the evening hours, the US will also release its business activity figures.

Fundamental Brent analysis for January 5, 2021

On Tuesday afternoon, world oil prices shifted to growth amid expectations of an OPEC+ decision to further cut oil production in February. The current quotation of the asset is $52.05 per barrel.

The meeting of all OPEC+ countries was supposed to end yesterday, but the participants in the meeting failed to reach an agreement on the volume of reductions next month, and the debate will continue today. The meeting participants are discussing two proposals: to increase production in February by 500 thousand bpd or to keep production at the January level. Russia and Kazakhstan are in favor of increasing production by 0.5 million bpd from February, while the rest of the countries are in favor of extending production at current levels.

Oil prices are also supported by continued optimism related to the recovery in demand. The start of coronavirus vaccination in many countries gives hope for the early lifting of restrictions on movement, which, in turn, will contribute to the growth of demand for raw materials.

However, despite vaccinations, the world today is still seeing an increase in the incidence of Covid-19, which suggests that in the short term, the increase in demand will still slow down.

EUR/USD. 06.01 | Euro has renewed its maximum at 1,2340

The euro is trying to gain a foothold above the 1.34 level. The current quote for the EUR/USD pair is 1.2340, which has become the next maximum since the beginning of 2018.

At the moment, investors are awaiting the election results from Georgia. As you know, Donald Trump continues to fight for the presidency, accusing the Democrats of rigging elections. However, the result of the recalculation should in no way affect the Fed's ultra-soft policy and monetary stimulus. Moreover, Democrats’ victory (with their stimulus plan) will only strengthen the upward impulse of the S&P 500 and lead to further weakening of the US dollar and a rise in risky assets.

During the day, the dynamics of the EUR/USD pair will also be influenced by the publication of business activity indices in Europe and the US, data on consumer prices in Germany and statistics on the number of people employed in the non-agricultural sector in the US from ADP. FOMC minutes will be published late in the evening.

EUR/USD. January 07, 2021 – Democrats won the Senate, the dollar went up

The Democrats won the Senate election, which greatly increases the likelihood of continued full stimulus and expansion of US infrastructure spending. However, at the same time, it is possible that taxes will increase and regulation will be strengthened.

The completion of the elections reduced market uncertainty and led to the strengthening of the US dollar. The current quote for the EUR/USD pair is 1.2245. Now the demand for risky assets can only increase with the escalation of the trade war between the United States and China or with a strong deterioration in macroeconomic indicators in the United States.

The minutes of the US Federal Reserve meeting were published yesterday evening. The document confirmed the regulator's plans not to abandon the super soft policy for a long time, until inflation steadily grows to target levels and significant improvements in unemployment statistics. Also, the volume of asset purchases ($120 billion per month) will not change.

Today you should pay attention to the ECB meeting and the decision of the regulator on monetary policy. The first this year Non-farm Payrolls report in the USA will be published tomorrow, experts expect very weak indicators.

GBP/USD. January 11, 2021 – The sterling starts the year weakening

The GBP/USD pair continues to decline, reaching 1.3460. The sterling is under pressure from the negative fundamental background. In particular, due to the nationwide lockdown announced in the UK back on January 4, the blow to economic growth in the country will be more severe than in other European countries.

Experts expect that GDP will fall by 2.7% in the first quarter of the year, and this may lead to a decrease in the interest rate by the Bank of England in February. Earlier it was expected that the regulator would cut the rate only by the end of the year. And even the adoption of the Brexit agreement will not be able to allay the concerns of the Central Bank, since a number of questions remain on the deal.

However, if the mass vaccination is successful, the pound could recover somewhat in the second quarter. In the meantime, the British currency will continue to decline.

EUR/USD. January 12, 2021 – The dollar stopped his rally at the level of 1.2130

On Tuesday, the dollar suspended its growth in the area of ​​1.2130. The EUR/USD pair has been hovering at 1.2150 for the second session in a row. The euro received some support after the release of data on the consumer confidence index in the euro zone from the Sentix institute in January: the indicator rose by 1.3 points against a decline earlier by 2.7. However, these statistics turned out to be worse than the forecast of 2.0 points growth.

The dollar continues to receive support from the election of a new president in the United States (Joe Biden will take office on January 20). Global markets are optimistic about the Democrat's plans to allocate additional trillions to fight the coronavirus pandemic.

Markets are usually a little nervous when it comes to stimulus processes as they can accelerate inflation and negatively affect the US currency. However, now in the foreground is the yield on 10-year government bonds, which keeps the US dollar afloat.

Today the macroeconomic calendar is not rich in publications, so the pair will continue to trade near the level of 1.2150. Attention should be paid only to the data on new vacancies (JOLT) for November in the United States. A job overview will give you an idea of ​​what is happening in the labor market in relation to recruitment. Analysts point out that 6.652 million vacancies were recorded in October.

EUR/USD. January 13, 2021 – The pair cannot determine the movement vector

The EUR/USD pair continues to trade in different directions, fluctuating within the range of 1.2130-1.2230. The current quote for the euro is 1.2165.

Yesterday the dollar weakened across the entire spectrum of the market amid declining yields on US government bonds. Today, the US currency has turned around and is showing corrective growth.

Today you should pay attention to the publication of inflation data for December. Analysts predict that the CPI added 0.1% mom after gaining 0.2% mom in November. Experts note that the more neutral the statistics are, the better for the dollar, since inflation surges would now be a high risk (in anticipation of the imminent introduction of a new stimulus package).

In the evening, the US Federal Reserve Beige Book will be published. Usually the market does not react to such publications, but they are important for understanding the general picture of what is happening in the American economy.