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Market News Financial Breakfast on September 25: Underweight is expected to push up the US dollar, gold rebounds to 1,750, and oil prices rise for five consecutive weeks

Financial Breakfast on September 25: Underweight is expected to push up the US dollar, gold rebounds to 1,750, and oil prices rise for five consecutive weeks

The U.S. dollar rose on September 24, as market concerns about inflation and Fed officials’ remarks fueled expectations about the Fed’s underweight asset acquisitions; at the same time, uncertainty about the US debt ceiling also suppressed risk appetite. As U.S. Treasury yields rebounded and traders digested the Fed’s policy guidelines, spot gold’s gains narrowed and closed near the 1750 mark. Oil prices have risen for the fifth consecutive week. As the global energy crisis is set to boost demand for crude oil, global crude oil inventories have dropped significantly.

TOPONE Markets Analyst
2021-09-25
9943

On Friday (September 24), the US dollar was generally higher against other currencies, the Australian dollar lags behind other currencies, and the 10-year US Treasury yield rose to 1.464%, the highest level since July 2. Spot gold futures closed higher, and the market is still evaluating the Fed's monetary policy plans, financial risks and other uncertainties. Burundi Oil hit its highest closing price since October 2018 for the second day in a row, as the supply of crude oil was disrupted and the supply was tight.

Commodity closing, COMEX December gold futures closed up 0.1%, at 1,751.70 US dollars per ounce. WTI November crude oil futures closed up 0.68 US dollars, or 0.93%, to 73.98 US dollars per barrel; Brent November crude oil futures closed up 0.84 US dollars, or 1.09%, to 78.09 US dollars per barrel.

US stocks closed: the S&P 500 index rose 0.2% to 4,455.48 points; the Dow Jones Industrial Average rose 0.1% to 34,798 points; the Nasdaq Composite Index was basically flat at 1,5047.7 points; the Nasdaq 100 index rose 0.1% , Reported 15329.68 points; Russell 2000 index fell 0.5%, reported 2248.075 points.

List of major global markets



Although the global stock market was turbulent earlier this week, U.S. stocks ended with gains on Friday. Traders ignored the Fed’s reduction of stimulus measures, and the S&P 500 rebounded in late trading, expanding weekly gains, with energy and financial stocks leading the way. The two regional Fed presidents stated that the U.S. economy has already met the Fed’s conditions for quickly starting to reduce asset purchases.

The Bank of America Research report quoted EPFR Global data as saying that as of the week of September 22, $28.6 billion flowed out of U.S. equity funds, the largest since February 2018. Even with a large outflow of funds, the private clients of Bank of America still have heavy stocks, and approximately 65% of the assets under management are invested in stocks.

Precious metals and crude oil


Spot gold's gains narrowed on Friday and closed near the $1750 mark. Traders digested the Fed's policy guidance and the benchmark 10-year U.S. Treasury yield rose to an intraday high, weakening the demand for gold.

After the results of the Fed's hard-line meeting, traders moved their expectations for the Fed to raise interest rates to the end of 2022.

Naeem Aslam, chief market analyst at Ava Trade, said that investors are evaluating the Federal Reserve’s remarks that the unprecedented stimulus measures provided to the market during the coronavirus pandemic are about to be phased out. However, because there is no timetable, scale and speed of downscaling. Specific details prevented gold from falling further. Looking ahead, investors should understand that unless the US dollar index changes significantly, the price of gold may be affected to a greater extent by investors' risk appetite.

U.S. crude oil rose 2.8% this week, rising for the fifth consecutive week. According to data analysis company Kayrros, global onshore crude oil inventories fell by nearly 21 million barrels last week, led by China, while US inventories were close to a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, thereby further tightening the market before the arrival of winter in the northern hemisphere.

Rystad Energy's crude oil market analyst Louise Dickson said in a report that the market reflects the long-term impact of supply disruptions and the inventory that may be consumed to meet refinery needs. In terms of oil demand, there is no new blockade in Europe and China's road traffic is strong. The recovery, as well as the removal of restrictions on the entry of foreign tourists from the United States in November, all of these have raised the prospects for demand growth in the coming quarters.

Foreign exchange


The U.S. dollar closed stronger this week, as market concerns about inflation and Fed officials’ remarks fueled expectations about the Fed’s underweight asset acquisitions; at the same time, uncertainty about the US debt ceiling also suppressed risk appetite. The US dollar was generally higher against other currencies on Friday, and the Australian dollar lags behind other currencies.

The dollar index rose 0.18% to 93.27, up about 0.05% this week; the US 10-year Treasury bond yield rose 2.8 basis points to 1.46%, and jumped 13 basis points on Thursday, as investors' expectations of the Fed’s interest rate hike increased.

Fed Chairman Powell said in a video conference on Friday that I have never seen such a supply chain problem, and have never seen such an economy: a severe shortage of labor, a large number of unemployed people, and a lot of idleness in the labor market.

Kansas City Fed President Esther George said in his speech that in my opinion, the standard for further substantive progress has been met, inflation is much higher than our target, and the unemployment rate is 5.2%, which is 1.5 percentage points lower than in December.

The euro to dollar fell 0.16% to 1.1720, having previously failed to break through the key resistance level near the 1.1750 US dollar; speculation and option buying slowed the decline in the exchange rate to the low of 1.1701; the euro fell 0.04% against the US dollar in a week.

The U.S. dollar rose 0.35% to 110.72 against the yen and hit 110.79 during the intraday session, the highest level since August 11. The yen has the weakest performance among the G-10 currencies, with the dollar rising 0.72% against the yen; European traders said that hedging selling is expected near 111.00 yen, but if the cost of hedging rises, it may face risks; the top of the nine-year-old flag pattern is near 111.12; speculative buying interest is at the 109.80-00 line. . The euro against the yen broke through the 200-day moving average at 129.66.

The pound fell 0.30% to 1.3679 against the US dollar. Traders turned their attention to the speech of the Governor of the Bank of England Andrew Bailey next week; there was a double bottom support above 1.3600 US dollars; the exchange rate fell by 0.45% every week.

The U.S. dollar fell slightly against the Canadian dollar to 1.2652. The exchange rate fell from the highest increase of 0.60% due to a 0.9% increase in crude oil prices; the currency pair fell 0.88% this week.

International news


[Powell led senior Federal Reserve officials to listen to public opinion and found that the impact of the epidemic on the economy is more pessimistic than the data] As the Fed is considering reducing its emergency stimulus measures, Powell listened to a series of situations on Friday that the US economy is still plagued by the new crown epidemic. He said at an event called "The Federal Reserve Listening", "I have never seen a supply chain problem like this, and I have never seen an economy experiencing a labor shortage at the same time, a large number of people are unemployed, and a lot of labor is idle." . Although there was no discussion of economic prospects or monetary policy during the event, Powell heard many ideas. Compared with the optimistic message conveyed by economic data, the participants described a different picture. They said that the epidemic has caused a series of shocking shocks to the supply chain, inflation, and labor market.

[U.S. Cleveland Federal Reserve Chairman Meester: Support the Fed's debt reduction in November, which will be completed in the first half of 2022. It is expected that the conditions for raising interest rates will be met before the end of 2022. The unemployment rate in the United States is about 4.75% at the end of 2021 and 4% at the end of 2022. The US GDP growth rate in 2021 is expected to be 3.75%-4%. The upside risk of inflation is greater than the downside risk. Inflation rate in the next few years will be slightly higher than 2%]

[George, President of the Kansas City Federal Reserve Bank of the United States: The United States has met the FOMC's criteria for further substantive progress. The impact of asset purchases complicates the task of assessing interest rate hikes. The "normal" economy may be difficult to understand for a period of time. In terms of boosting the labor market, improving spending in the service industry is of great significance, which will ease the pressure caused by commodity demand. The shift to service demand may help ease inflationary pressures. If spending returns to historical levels, it will help smooth prices and help economic growth]

[U.S. natural gas futures prices have risen and concerns about tight inventories persist] Due to the rebound of LNG exports, production is still sluggish, and people are worried about the low level of natural gas inventories before the winter, and US natural gas prices have risen. Gary Cunningham, head of market research at Tradition Energy, said, “Although the weather has been relatively mild in the past few weeks and the LNG facilities have been offline, the injection of reserves is still very small. Some offshore rigs may be shut down for several months, thereby inhibiting supply in the winter. The news also supported natural gas prices." After Hurricane Ida, about 24% of the gas production capacity in the Gulf of Mexico is still closed, and production is not expected to fully recover until next year.

Domestic news


[Analyst: A-share structural market before the holiday is difficult to "shift"] On September 24, the Shanghai and Shenzhen stock markets fluctuated and adjusted, and the main funds continued to maintain a net outflow. Wind data shows that this week's main funds have net outflows for 3 consecutive trading days, with a total net outflow of 100.628 billion yuan. Analysts said that due to the approaching National Day holiday and increasing market uncertainties, the volatility of A shares may weaken. Short-term funds are more likely to rotate between sectors with high prosperity and favorable policies, and the structural market is expected to continue. (China Securities Journal)

[National Development and Reform Commission held a special meeting to deploy the implementation of mid- and long-term coal supply contracts for heating and power generation] The meeting proposed that full coverage of mid- and long-term coal contracts for power generation and heating is related to the warmth of the people through the winter and the smooth operation of the economy. Regarding social harmony and stability, the focus is on securing coal sources and fully guaranteeing the people's coal needs for power generation and heating. After convergence, the medium and long-term contract coal sources for power generation and heating coal in the fourth quarter of this year have all been decomposed into key coal-producing areas. In the next step, the National Development and Reform Commission will strengthen follow-up and inquiries, coordinate and solve outstanding problems in the work in a timely manner, and fully promote the full coverage of medium and long-term coal contracts for power generation and heating in the fourth quarter, reduce coal costs, stabilize social expectations, and ensure coal sources Put it in place and keep the bottom line of coal for people's livelihood.

[Zheng Commercial: After research and decision, starting from the settlement on September 27, 2021, the trading margin standard for ferrosilicon and manganese-silicon futures contracts will be adjusted to 10%, and the price limit will be adjusted to 9%.]

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