The new trading week opens with a weakened U.S. dollar and British Pound while inflation concerns are casting a shadow over global markets. Oil, the black gold, is on a rally while gold- the shiny metal – is also on the rise.
Forex:
The U.S. dollar (USD) fell on Monday morning in Asia. The currency is entering the week steady but remains below its Friday peaks. Despite volatile interest rate projections, central banks around the world are adopting dovish monetary policy decisions.
The British pound (GBP) was hit when the Bank of England decided to keep its interest rates unchanged to 0.10%. In the U.S., the Federal Reserve also kept its interest rate steady despite its decision to begin asset tapering.
NFP:
531,000 jobs were added in the U.S. according to the non-farm payrolls job report. The figure was higher than expected while unemployment rate decreased to 4.6%.
Metals:
Gold went up on Monday morning in Asia. The fall of the U.S. dollar boosted the shiny metal that hit a 2-month high. Silver recorded a 0.3% increase; platinum went up 0.2% and palladium was up 0.5%.
Oil:
Oil advanced as Aramco, a Saudi Arabian oil producer owned by the state, increased its official December crude selling price. OPEC+ decided to raise its December oil output by 400,000 barrels per day during last week’s meeting.
According to U.S. Energy Secretary, Jennifer Granholm, U.S. President Joe Biden’s administration will study the crude oil supply data from the API (American Petroleum Institute) and EIA (Energy Information Administration) this week.
Oil climbed to 7-year highs which prompted Biden to call OPEC+ for an increase in supply. According to analysts, OPEC + may not change its stance. Also, Aramco’s move to increase its oil prices could point to a resistance against U.S. pressure for a rise in oil supply.
Inflation Talk:
The inflation debate is still haunting the markets. The strong earnings season in the U.S. allowed the market to take a breather from the rising prices and supply chain shortages. According to Bloomberg Intelligence, U.S. consumer prices (CPI) could show price pressures last witnessed 3 decades ago as the markets are experiencing supply-chain shortages and higher oil prices.
In the meantime, the Bank of Japan (BOJ) is moving forward with an easy monetary policy. According to its latest Summary of Opinions – the BOJ’s report presenting its projection for inflation and economic growth – inflation is rising modestly and wage growth remains low.
Watch Closely this Week
Tuesday:
San Francisco Fed Bank President’s speech
Wednesday:
China PPI
U.S. Wholesale inventories, CPI, initial jobless claims
Thursday:
Singles’ Day – the world’s biggest shopping festival – in China