Financial Breakfast on September 30: The U.S. dollar hits a one-year high, gold hit a seven-week low, and silver plunged 4%
The US dollar index hit a one-year high on September 29, as the market increasingly expected the Fed to reduce its asset purchases from November and may raise interest rates by the end of 2022. As the U.S. dollar continued to rise, spot gold hit a record low of US$1721.76 per ounce in the past seven weeks, and spot silver fell more than 4% to US$21.42 per ounce, the lowest level since July last year. Oil prices fell, and EIA data showed that US crude oil inventories climbed for the first time in eight weeks last week, and gasoline inventories increased slightly.

On Wednesday (September 29), the U.S. dollar index refreshed a nearly one-year high to 94.43. Analysts said that although the U.S. government is deadlocked on the debt ceiling issue, which may lead to a suspension, as the world’s largest reserve currency, the U.S. dollar is under market pressure. It is regarded as a safe-haven bet when it is big. The dollar has strengthened in recent days, as investors have turned to concerns about the global economic slowdown, rising energy prices and sharp rise in U.S. Treasury yields. COMEX gold futures fell for the second consecutive trading day, closing at the lowest level since the end of March; silver futures fell 4.4% to close at $21.485 per ounce, the lowest closing price since July 2020. Oil prices fell after the unexpected increase in US inventories, although OPEC still plans to maintain a policy of slow production increase.
Commodity closing, COMEX December spot gold futures closed down 0.8%, at 1,722.90 US dollars per ounce. WTI November crude oil futures closed down 0.46 US dollars, or 0.61%, to 74.83 US dollars per barrel; Brent November crude oil futures closed down 0.45 US dollars, or 0.57%, to 78.64 US dollars per barrel.
US stocks closed: the S&P 500 index rose 0.2% to 4359.46 points; the Dow Jones Industrial Average rose 0.3% to 34390.72 points; the Nasdaq Composite Index fell 0.2% to 14512.44 points; the Nasdaq 100 index fell 0.1 %, reported 14752.89 points; Russell 2000 index fell 0.2%, reported 2225.308 points
Thursday preview
time | area | index | The former value | Predictive value |
09:00 | China | September official manufacturing PMI | 50.1 | 50 |
09:45 | China | September Caixin Manufacturing PMI | 49.2 | 49.5 |
14:00 | U.K | Final value of GDP annual rate in the second quarter (%) | 22.2 | 22.2 |
14:00 | U.K | Final value of GDP quarterly rate in the second quarter (%) | 4.8 | 4.8 |
15:55 | Germany | September seasonally adjusted unemployment rate (%) | 5.5 | 5.5 |
15:55 | Germany | Changes in the number of unemployed after the seasonal adjustment in September (10,000 people) | -5.3 | -3.7 |
17:00 | Eurozone | August unemployment rate (%) | 7.6 | 7.5 |
20:00 | Germany | September CPI annual rate initial value (%) | 3.9 | 4.2 |
20:30 | America | As of September 25, the number of initial claims for unemployment benefits (10,000) | 35.1 | 33 |
20:30 | America | As of the week of September 18, the number of people claiming unemployment benefits (10,000) | 284.5 | 280 |
20:30 | America | Final value of real GDP annualized quarterly rate in the second quarter (%) | 6.6 | 6.6 |
20:30 | America | Final value of GDP deflator in the second quarter (%) | 6.1 | 6.1 |
20:30 | America | Final value of annualized quarterly rate of consumer spending in the second quarter (%) | 11.9 | 11.9 |
20:30 | America | Final value of the annualized quarterly rate of the core PCE price index in the second quarter (%) | 6.1 | 6.1 |
21:45 | America | September Chicago PMI | 66.8 | 65 |
22:00 The U.S. House of Representatives panel of experts holds a hearing on the Federal Reserve and the Treasury Department’s response to the COVID-19 pandemic
22:00 FOMC Permanent Voting Committee and New York Federal Reserve Chairman Williams participate in the discussion of the Federal Reserve's response to the new crown epidemic
23:00 In 2021, the FOMC voting committee and Atlanta Fed President Bostic delivered a speech on the economy
23:30 Philadelphia Fed Chairman Hacker gave an online speech at the "Federal Dialogue: Development Regulation, Sustainable Assets and Financial Markets" event at the official forum of international monetary and financial institutions. 00:30 AM FOMC Voting Committee, Chicago Fed Chairman Egypt Vince participates in an online event 01:05 AM St. Louis Fed President Brad gives an online speech 03:30 AM Philadelphia Fed President Hack gives a speech
List of major global markets
The US stock market was mixed on Wednesday, and the decline in technology stocks weighed on the broader market. The S&P 500 index gave up most of its gains, as declines in technology stocks offset the rise in defensive sectors such as utilities and consumer staples.
Fed Chairman Powell and the European Central Bank, the Bank of Japan, and the Governors of the Bank of England all expressed cautiously optimistic views on the economy on Wednesday, believing that the disruption of the global supply chain that pushes up inflation will not persist.
Traders remain vigilant about the US debt ceiling, and beware of the market impact if Congress fails to raise the debt ceiling in time. Fiona Cincotta, a senior financial market analyst at City Index, said that concerns about high inflation and slowing growth may continue for some time. In the absence of economic data, discussions on the debt ceiling in Washington may become the focus of the market.
Citi’s survey of institutional clients shows that most investors are worried about persistently high inflation, believing that the probability of a 20% drop in US stocks is greater than a 20% rise. According to a survey of more than 90 pension funds, mutual funds and hedge funds this month, although most people expect the S&P 500 Index to rise moderately next year, price pressures and the Fed’s policy reversal pose a major risk to the stock index.
Precious metals and crude oil
The price of gold fell to its lowest level in seven weeks on Wednesday. Spot gold refreshed its lowest point since August 10 to $1,721.76 per ounce, as the U.S. dollar is rising and the market expects that the Fed may soon begin to reduce economic support measures.
Kitco Metals senior analyst Jim Wyckoff said that the continuous appreciation of the U.S. dollar limits the upside of gold, making gold more expensive for holders of other currencies. If the stock market becomes unstable again, gold entering the historically turbulent October may obtain better hedging demand.
Another type of U.S. dollar, regarded as a safe-haven asset, hit a one-year high, although Washington’s deadlock over the U.S. debt ceiling may lead to a government shutdown. Wyckoff added that if the government does begin to shut down, it may boost gold and silver because of their safe-haven appeal.
The 10-year U.S. Treasury yield has fallen, providing some breathing opportunities for gold prices, but the yield remains above 1.5%, the highest level since the end of June, which still poses a challenge to gold prices.
FXTM market analyst Lukman Otunuga said that with the strengthening of the US dollar, precious metals may weaken further. But he believes that the prospects of gold futures may be affected by the Fed's "preferred inflation indicator"-the core personal consumption expenditure price index released on Friday.
Crude oil prices have fallen with the rise of the US dollar. In addition, US government reports show that crude oil inventories have risen for the first time in eight weeks. New York crude oil futures fell 0.6% on Wednesday, volatile throughout the day. US crude oil inventories increased by more than 4 million barrels, dragging down crude oil futures, and a stronger dollar also reduced the attractiveness of this bulk commodity export.
Oil prices rose earlier this week-Brent prices exceeded $80 a barrel-reflecting growing demand and rising natural gas prices that have tightened global markets. The increase in energy prices this month has led the market to speculate that the Organization of the Petroleum Exporting Countries (OPEC) and its allies may ease production cuts more quickly.
The White House said on Tuesday that it continues to discuss the importance of competitive markets and take more actions to support economic recovery with international partners, including OPEC. At the same time, according to an OPEC secretariat document reviewed by the OPEC Joint Technical Committee, global oil supply is expected to be 1.2 million barrels less than demand per day in October and 900,000 barrels less in November.
Foreign exchange
The U.S. dollar index set its biggest one-day gain since the FOMC meeting in June, rising against G-10 currencies across the board and hitting the highest level since September last year. The model tends to have broad dollar buying at the end of the month; the strong momentum is driven by momentum buying and the renewed weakness of emerging market currencies, including the offshore renminbi. The New Zealand dollar and the Norwegian Krone fell the most today, as the commodity index interrupted its five-day gains. The euro fell to its lowest point since July 2020.
The U.S. dollar index rose by 0.75% during the session, which was the fourth consecutive day of rising; in late trading it rose 0.68% to 94.37; the 10-year U.S. Treasury yield shrank and dropped earlier, flat at 1.54%.
ING analyst Francesco Pesole and others said that the current market environment seems to provide a perfect combination of factors for the dollar to be supported, including higher U.S. bond yields and the Federal Reserve's expectations of a reduction.
Traders are also worried that the Fed will begin to withdraw policy support at a time when global growth slows.
Kit Juckes, a macro strategist at Societe Generale, wrote in his latest research report that the Federal Reserve has fired the starting gun for the normalization of monetary policy. As the United States breaks out of the zero interest rate range and leaves the Eurozone and Japan behind, excess global savings will inevitably be attracted to the U.S. dollar. The U.S. dollar may outperform most other currencies in the coming year, and this trend may be more than we expected. Start early.
Erik Nelson, a macro strategist at Wells Fargo, believes that the dollar index still has 2%-3% upside.
The euro fell against the US dollar for the fourth consecutive day. It fell 0.8% to 1.1589 during the intraday session, the lowest point since July 2020; profit-taking was seen near 1.160; the three-month risk reversal indicator turned to the most pessimistic since the end of June. Gabriel Makhlouf, a member of the European Central Bank’s Management Committee, said that policymakers must be prepared to cope with the continued rise in inflation that may be caused by continued supply bottlenecks.
The yen had little reaction to Fumio Kishida's election as the president of the Liberal Democratic Party of Japan. The election of Kishida as president actually ensures that he will become Japan's next prime minister. Although the yen outperformed other G-10 currencies except the dollar, the dollar hit an 18-month high against the yen, affected by strong buying and weak gold. The USD/JPY was suppressed by real-money institutional selling near the intraday high; selling above the high of 112.23 in March 2020 is also expected to slow the rise. The U.S. dollar against the yen once hit 112.05, the highest since the end of February last year, and rose 0.41% to 111.96 in late trading.
The pound fell 0.81% to 1.3427 against the dollar. Saxo Bank Chief Investment Officer Steen Jakobsen said that market confidence in the pound is collapsing because the UK is facing problems including energy shortages, shortage of domestic cargo transportation capacity and a sense of isolation after Brexit.
The US dollar rose 0.55% to 1.2757 against the Canadian dollar; the Australian dollar fell 0.83% to 0.7176 against the US dollar; the New Zealand dollar fell 1.26% to 0.6869 against the US dollar.
International news
[Fed Chairman Powell: The outlook for the US economy is highly uncertain. With the help of a series of policies of the federal government, we have obtained strong demand. Now it is the supply side that is dragging the U.S. economy. The delta mutated strain of COVID-19 has hindered progress in recent months. As supply bottlenecks are brought under control/tend to ease, inflation is expected to fall. The bottleneck problem has pushed up inflation for longer than I originally imagined. Soaring inflation will not cause sustained high inflation]
[European Central Bank President Lagarde: The euro zone is returning from a marginal state, but it has not yet shaken off the dilemma caused by the new crown pneumonia epidemic. The Eurozone is expected to return to the state before the new crown pneumonia epidemic by the end of 2021. In some areas, the supply bottleneck is getting worse. Uncertainty poses a threat to economic growth in the Eurozone]
[BoJ Governor Haruhiko Kuroda: Japan's economy is gradually picking up and exports are strengthening. However, Japanese consumption is "still very weak." Japan's GDP will recover the losses caused by the new crown pneumonia epidemic until later in 2021 or before 2022. Consumption may resume in the next few months. The economy is expected to grow by about 4% in 2022]
[Bank of England Governor Bailey: The economic impact of the new crown pneumonia epidemic tends to ease. But the recovery is uneven. Hope that the supply chain bottleneck problem is temporary. Anchoring inflation expectations is of great significance. The key is to observe labor supply and inflation expectations. Lack of consensus on the reasons for the shock on the supply side of the UK]
[EIA report: US commercial crude oil inventories excluding strategic reserves increased by 4.578 million barrels to 418.5 million barrels last week] US EIA gasoline inventories increased by 193,000 barrels and refined oil inventories increased by 384,000 barrels for the week ended September 24. Last week, US domestic crude oil production increased by 500,000 barrels to 11.1 million barrels per day. In addition to the strategic reserves of commercial crude oil imports last week was 6.552 million barrels per day, an increase of 87,000 barrels per day from the previous week, and crude oil exports increased by 211,000 barrels per day to 3.02 million barrels per day last week.
Domestic news
[ETF opening up a defensive mode, the average position before listing is less than 20%] Since September, the A-share market has been volatile, and trading open-end index funds (ETFs) have become cautious in opening positions. The listing announcement shows that since this month, 22 stock ETFs have announced their listings, with an average position of only 19.33%, and some ETFs even have zero stock positions. Some fund managers said that some popular industry sectors have high valuations and high market volatility. It is difficult to open positions. In order to avoid large fluctuations in net value before listing, they will choose to open positions close to the listing day to meet the requirements. (Securities Times)
[National Development and Reform Commission: Support qualified high-quality coal mines to release advanced production capacity and moderately increase coal imports] The responsible comrades of the Economic Operation and Regulation Bureau of the National Development and Reform Commission responded to how to ensure a stable supply of coal: First, make every effort to increase production and supply while ensuring safety. Guide major coal-producing areas and key enterprises, scientifically formulate production plans, and safely and effectively release advanced production capacity. The second is to further nuclear increase and put into production high-quality production capacity. Support qualified coal mines with high-quality production capacity to release advanced production capacity. The third is to moderately increase coal imports. Support enterprises to make good use of international resources, maintain a moderate import scale, and effectively supplement domestic supply. The fourth is to focus on improving the level of coal storage. Support localities and enterprises to strengthen the construction of coal reserve capacity, prepare a certain scale of emergency reserve resources, and focus on increasing coal storage in power plants. Fifth, we will focus on ensuring the coal demand for power generation and heating. The sixth is to standardize the order of market operations, strengthen market supervision in conjunction with relevant departments, and severely investigate and punish violations such as price hikes to stabilize social expectations. (National Development and Reform Commission)
[National Development and Reform Commission: Instruct all localities to effectively organize electricity market transactions, strictly implement the market-based price mechanism of “base price + fluctuating” for coal-fired power generation, and allow more electricity to enter the market for transactions, and no normal fluctuations in market prices within a reasonable range Improper intervention to make prices reasonably reflect changes in electricity supply and demand and costs]
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