Archives of “December 1, 2020” day

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Oil nears August levels as OPEC angst grows

  
Analysis, Crude

Oil down 1.5%

Oil down 1.5%
The OPEC+ decision was supposed to be today but trouble arose yesterday with the UAE grandstanding about the lack of full compliance and payback cuts. It’s also unclear if Russia is on board.
As a result, the meeting was moved to Thursday and oil prices have come under pressure.
Support is at the August high of $43.78. The low so far today was $44.12. Technically, it looks like a retest of an old break.
The problem in my mind is that demand in the front few months is still deeply depressed but the curve is essentially flat through 2021, in part because so much oil will be coming out of storage.

Brexit: Hopes on both sides as the Brexit deal enters the tunnel

  
Analysis, Forex

Report from the Times Radio

Tom Newton Dunn of the Times Radio reports:
UK-EU trade deal talks have, at long last, entered the mythical tunnel. Michel Barnier has stopped internal debriefs to the wider EU, his last was on Friday. Hopes (on both sides) of a deal by the end of this week – but could still yet all fall apart
Big 70-pip jump in cable to 1.3426, the highest since Sept 1.
Report from the Times Radio

Stocks are still partying like it’s November

  
  Analysis

A brand new month, but same old story in the equities space

It is risk-on to start December trading and equities are looking poised for a solid day of gains after a bit of a pause amid month-end trading yesterday.

E-minis 01-12
S&P 500 futures are up by over 1% now with European indices also posting a little over 1% gains (UK stocks are 2% higher) so far on the session.
US 10-year Treasury yields are also 2 bps higher at 0.859% and that is keeping the risk mood in a better spot, with the dollar and yen the weakest performers on the day.
Back to the S&P 500, dip buyers are certainly poised to try and breach the all-time high from 9 November of 3,645.99. That may be the kick that is needed to break free from the 3,200 to 3,600 range seen since September trading.

SPX

OECD cuts 2021 global forecast, warns governments to maintain support

  
Analysis, Crude

OECD sees a gradual and uneven global recovery over the next two years

OECD
  • 2021 global growth forecast 4.2% (previously 5.0%)
  • 2021 US growth forecast 3.2% (previously 4.0%)
  • 2021 Eurozone growth forecast 3.6% (previously 5.1%)
  • 2021 UK growth forecast 4.2% (previously 7.6%)

OECD chief economist, Laurence Boone, comments on the report:

“Policy still has a lot to do. If public health or fiscal policy falter then we would see a loss of confidence and a much more depressing outlook.”

As per the usual, take these forecasts with a pinch of salt as they are merely sentiment indicators rather than predictors of what is to happen next.

Dollar’s December doldrums

  
Analysis, Forex

Heads away for Christmas

The USD has strong reasons for USD weakness heading into year end.The USD tends to see outflows in December and inflows in January due to taxation issues. It is a pattern that has repeated itself over the last 50 years and you can see the outflows here in December below.

Heads away for Christmas 

In December large US companies move money to daughter companies to save taxes.In January the money comes back into the US. This pattern is solid and here is the seasonal outline over the last 25 years. So this would favour further falls in the DXY heading into year end. 

Dollar

Switzerland Q3 GDP +7.2% vs +6.0% q/q expected

  
Analysis, Economy

Latest data released by the Federal Statistics Office – 1 December 2020

  • Prior (Q2) -8.2%; revised to -7.0%
  • GDP -1.6% vs -3.4% y/y expected
  • Prior -9.3%; revised to -7.8%

The good news is that the Swiss economy bounced back more than estimated in Q3 but that is more than offset by the virus resurgence and its impact on the economy in Q4, which is the market focus at the moment (alongside Q1 2021 and vaccine optimism).

Nikkei 225 closes higher by 1.34% at 26,787.54

  
Analysis, Global Indices

Asian equities climb as risk keeps more buoyed to start the new month

Nikkei 01-12
With month-end flows out of the way, the new month is beginning in the same way November traded as stocks are keeping higher once again. The Hang Seng is up 1.1% while the Shanghai Composite is up 1.4% going into the closing stages.
Meanwhile, S&P 500 futures are seen higher by 0.8% after the cash market closed lower yesterday but produced a late push to finish closer to the highs.
In the currencies space, the dollar and yen are among the laggards so far today but key technical levels are still in play for the time being – similar to yesterday.
EUR/USD is bouncing off its 100-hour moving average with the 1.2000 level a key one to watch. Meanwhile, GBP/USD stays choppy in between 1.3300 and 1.3400 while AUD/USD buyers need to show more mettle in contesting the 0.7400 handle.
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