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Market News Gold trading reminder: The U.S. dollar hits a 16-month high, the bullish gains are suspended, pay attention to "terrorist data"
Gold trading reminder: The U.S. dollar hits a 16-month high, the bullish gains are suspended, pay attention to "terrorist data"
During the Asian session on November 16, spot gold held steady at around 1862. The price of gold rose temporarily on Monday, as the dollar and US bond yields rose, but inflation concerns continued to support gold prices. Within days and days, focus on retail sales of "terrorist data" and speeches by Fed officials.
2021-11-16
9077
On Tuesday (November 16) Asian time, spot gold held steady at around 1862. On Monday (November 15), the price of gold fell slightly, mainly due to the rise in the yields of the U.S. dollar and U.S. Treasuries, but inflation concerns continued to support gold prices.
In the day, the focus will be on "terrorist data" retail sales and Fed officials' speeches. The data may perform well, which is negative for gold prices.
[Biden signs the infrastructure law at a political moment]
U.S. President Biden promised the people that the new infrastructure law will improve their lives and keep the U.S. economy going, even though polls show that Americans are generally dissatisfied with the future of the country.
At a White House ceremony on Monday, Biden signed the $550 billion bill. Previously, he appointed a committee to direct the implementation of this law, led by Brian Deese, director of the National Economic Council, and Mitch Landrieu, the new White House infrastructure coordinator.
Biden said at the ceremony: "I want to tell the American people: America is acting again. And your life will become better, and we have achieved democracy for the people."
According to the White House, the committee established by Biden signed an executive order earlier on Monday will be responsible for the allocation of funds according to the government’s priorities. This means that first-line projects need to use American suppliers, provide union employment, and be able to withstand the test of the impact of climate change.
The committee is also responsible for ensuring that projects comply with the government's "Just 40" initiative, which requires at least 40% of federal investment to go to "vulnerable communities." Biden also asked the committee to coordinate with state, local and tribal governments to avoid waste.
The signing of the infrastructure bill comes at a dangerous juncture in Biden's politics. Recent polls show that Americans are pessimistic about the state of the US economy and Biden's handling of it, especially inflation.
Although the unemployment rate has fallen and wages have risen, prices for everything from energy to food, housing, medical care, entertainment, home furnishings, and used cars are rising, causing Americans to feel that the economy is not developing in the right direction.
[U.S. labor shortage is the highest in 70 years]
Jefferies Group LLC said that wage pressures will become the main driver of inflation in the United States in the second half of next year under the continuing shortage of available labor.
Aneta Markowska, chief financial economist at Jefferies, said in a report on Monday, “ We believe that the United States is entering the most tense labor market environment since the 1950s, so salary pressure is unlikely to ease next year. Even if the supply chain bottleneck weakens, the inflation rate will remain high. ".
Markowska said that although temporary factors have contributed about 1.5 percentage points to CPI in the past year, the impact of tight labor supply on CPI is close to 1 percentage point, and "this factor is unlikely to change." Excluding food and energy, the CPI increased by 4.6%, the highest level since 1991.
Markowska said, “We recognize that factors related to the epidemic have temporarily depressed labor supply, which has led to recent wage increases. We don’t think wage pressure will significantly decrease.” The current employment in the United States is 6 million less than before the outbreak. Markowska said it is difficult to fully recover before the outbreak, partly because some people have retired.
Many policymakers, including the White House and the Federal Reserve, blamed the supply chain chaos for the recent high inflation. It is generally expected that as these pressures ease, the inflation rate will fall.
But as inflation accelerates further in the last three months of this year, “the Fed is facing increasing pressure,” Markowska said. “ We think the most logical response is to accelerate the pace of downsizing, which is expected to be announced at the December meeting . "
[The U.S. dollar hits a 16-month high, the market focus shifts to US retail sales data]
The safe-haven US dollar hit a 16-month high against major currencies on Monday. Driven by global economic growth and inflation concerns and monetary policy expectations, investors are waiting for the US consumer spending data to be released this week.
(Daily chart of the US dollar index)
The U.S. dollar rose sharply after data released last Wednesday showed that the Consumer Price Index (CPI) recorded the largest year-on-year increase since 1990. The data cast doubt on the Fed's view that price pressures will be temporary, and triggered market speculation that the Fed will raise interest rates earlier than previously expected.
U.S. dollar demand weakened last Friday as reports showed that consumer confidence fell to its lowest level in 10 years, partly due to soaring inflation. But after policymakers in Europe and the UK expressed concerns about economic growth and inflation, demand for the dollar rebounded on Monday.
Investors will pay attention to the US retail sales data released on Tuesday to find clues about the next move of the dollar. According to the survey, the data is expected to show that retail sales rose 1.1% last month.
The rise in the dollar index, which is heavily weighted by the euro, was also driven by the fall in the euro. European Central Bank President Lagarde continued to suppress market bets on austerity policies.
Lagarde said that supply chain bottlenecks and soaring energy costs are slowing down the euro zone's economic growth and will keep inflation at a high level for a longer period of time than previously expected.
Jane Foley, head of foreign exchange strategy at Rabobank London, said that Lagarde "reaffirmed the dovish outlook of policy makers", which has restricted the euro.
[New York State Manufacturing Index Increases More Than Expected]
With orders growing and employment accelerating, New York State’s manufacturing sector grew more than expected in November, and the sales price index rose to the highest level since the data was counted in 2001.
Data released on Monday showed that the Federal Reserve Bank of New York Manufacturing Survey Index rose to 30.9 from 19.8 a month ago. A figure above zero indicates that the economy is expanding. The November data exceeded the forecasts of all economists surveyed.
The report shows that inflation shows little signs of abating. The indicator of receiving prices climbed 7.3 points to 50.8, and the indicator of prices paid for raw materials rose to 83, the second highest in history.
Strong demand also promoted employment growth in the manufacturing industry, and related indicators soared 8.9 points to a record 26 points.
The delivery time was extended, and the shipment volume index rose to a four-month high.
At the same time, New York State manufacturers' optimism about business conditions in the next six months has fallen. However, the report shows that capital expenditures are expected to rise to the highest level since January 2018 in the coming months.
[U.S. Treasury bonds have expanded their decline as a large number of investment-grade corporate bonds have begun to set prices]
The steepening of the US Treasury bond bear market pushed the spread of 2s10s and 5s30s to expand by 5.7 basis points and 4.6 basis points respectively; the 10-year Treasury bond yield closed at around 1.625%, an increase of 6.5 basis points.
At the back end of the yield curve, the 20-year Treasury bond performed poorly before the Treasury bond auction on Wednesday, and the 10s20s30s spread rose by 3.5 basis points on the same day, regaining the downward trend that began last Friday.
Interest rate volatility also continued the upward trend of last week, with 3m10y parity swap options rising to the highest level since April. As of 3 p.m. Eastern time, the trading volume of US Treasury futures was 73% of the 20-day average, and European dollar activity was also lower than normal.
In general, although the US dollar remains strong, the price of gold is still supported by high inflation in the near term, and it is expected that it is expected to remain high in the short-term.
(Daily chart of the US dollar index)
GMT+8 8:44, spot gold was quoted at US$1,864.38 per ounce.
In the day, the focus will be on "terrorist data" retail sales and Fed officials' speeches. The data may perform well, which is negative for gold prices.
Fundamentals are bullish
[Biden signs the infrastructure law at a political moment]
U.S. President Biden promised the people that the new infrastructure law will improve their lives and keep the U.S. economy going, even though polls show that Americans are generally dissatisfied with the future of the country.
At a White House ceremony on Monday, Biden signed the $550 billion bill. Previously, he appointed a committee to direct the implementation of this law, led by Brian Deese, director of the National Economic Council, and Mitch Landrieu, the new White House infrastructure coordinator.
Biden said at the ceremony: "I want to tell the American people: America is acting again. And your life will become better, and we have achieved democracy for the people."
According to the White House, the committee established by Biden signed an executive order earlier on Monday will be responsible for the allocation of funds according to the government’s priorities. This means that first-line projects need to use American suppliers, provide union employment, and be able to withstand the test of the impact of climate change.
The committee is also responsible for ensuring that projects comply with the government's "Just 40" initiative, which requires at least 40% of federal investment to go to "vulnerable communities." Biden also asked the committee to coordinate with state, local and tribal governments to avoid waste.
The signing of the infrastructure bill comes at a dangerous juncture in Biden's politics. Recent polls show that Americans are pessimistic about the state of the US economy and Biden's handling of it, especially inflation.
Although the unemployment rate has fallen and wages have risen, prices for everything from energy to food, housing, medical care, entertainment, home furnishings, and used cars are rising, causing Americans to feel that the economy is not developing in the right direction.
[U.S. labor shortage is the highest in 70 years]
Jefferies Group LLC said that wage pressures will become the main driver of inflation in the United States in the second half of next year under the continuing shortage of available labor.
Aneta Markowska, chief financial economist at Jefferies, said in a report on Monday, “ We believe that the United States is entering the most tense labor market environment since the 1950s, so salary pressure is unlikely to ease next year. Even if the supply chain bottleneck weakens, the inflation rate will remain high. ".
Markowska said that although temporary factors have contributed about 1.5 percentage points to CPI in the past year, the impact of tight labor supply on CPI is close to 1 percentage point, and "this factor is unlikely to change." Excluding food and energy, the CPI increased by 4.6%, the highest level since 1991.
Markowska said, “We recognize that factors related to the epidemic have temporarily depressed labor supply, which has led to recent wage increases. We don’t think wage pressure will significantly decrease.” The current employment in the United States is 6 million less than before the outbreak. Markowska said it is difficult to fully recover before the outbreak, partly because some people have retired.
Many policymakers, including the White House and the Federal Reserve, blamed the supply chain chaos for the recent high inflation. It is generally expected that as these pressures ease, the inflation rate will fall.
But as inflation accelerates further in the last three months of this year, “the Fed is facing increasing pressure,” Markowska said. “ We think the most logical response is to accelerate the pace of downsizing, which is expected to be announced at the December meeting . "
Fundamentals are bad
[The U.S. dollar hits a 16-month high, the market focus shifts to US retail sales data]
The safe-haven US dollar hit a 16-month high against major currencies on Monday. Driven by global economic growth and inflation concerns and monetary policy expectations, investors are waiting for the US consumer spending data to be released this week.
(Daily chart of the US dollar index)
The U.S. dollar rose sharply after data released last Wednesday showed that the Consumer Price Index (CPI) recorded the largest year-on-year increase since 1990. The data cast doubt on the Fed's view that price pressures will be temporary, and triggered market speculation that the Fed will raise interest rates earlier than previously expected.
U.S. dollar demand weakened last Friday as reports showed that consumer confidence fell to its lowest level in 10 years, partly due to soaring inflation. But after policymakers in Europe and the UK expressed concerns about economic growth and inflation, demand for the dollar rebounded on Monday.
Investors will pay attention to the US retail sales data released on Tuesday to find clues about the next move of the dollar. According to the survey, the data is expected to show that retail sales rose 1.1% last month.
The rise in the dollar index, which is heavily weighted by the euro, was also driven by the fall in the euro. European Central Bank President Lagarde continued to suppress market bets on austerity policies.
Lagarde said that supply chain bottlenecks and soaring energy costs are slowing down the euro zone's economic growth and will keep inflation at a high level for a longer period of time than previously expected.
Jane Foley, head of foreign exchange strategy at Rabobank London, said that Lagarde "reaffirmed the dovish outlook of policy makers", which has restricted the euro.
[New York State Manufacturing Index Increases More Than Expected]
With orders growing and employment accelerating, New York State’s manufacturing sector grew more than expected in November, and the sales price index rose to the highest level since the data was counted in 2001.
Data released on Monday showed that the Federal Reserve Bank of New York Manufacturing Survey Index rose to 30.9 from 19.8 a month ago. A figure above zero indicates that the economy is expanding. The November data exceeded the forecasts of all economists surveyed.
The report shows that inflation shows little signs of abating. The indicator of receiving prices climbed 7.3 points to 50.8, and the indicator of prices paid for raw materials rose to 83, the second highest in history.
Strong demand also promoted employment growth in the manufacturing industry, and related indicators soared 8.9 points to a record 26 points.
The delivery time was extended, and the shipment volume index rose to a four-month high.
At the same time, New York State manufacturers' optimism about business conditions in the next six months has fallen. However, the report shows that capital expenditures are expected to rise to the highest level since January 2018 in the coming months.
[U.S. Treasury bonds have expanded their decline as a large number of investment-grade corporate bonds have begun to set prices]
The steepening of the US Treasury bond bear market pushed the spread of 2s10s and 5s30s to expand by 5.7 basis points and 4.6 basis points respectively; the 10-year Treasury bond yield closed at around 1.625%, an increase of 6.5 basis points.
At the back end of the yield curve, the 20-year Treasury bond performed poorly before the Treasury bond auction on Wednesday, and the 10s20s30s spread rose by 3.5 basis points on the same day, regaining the downward trend that began last Friday.
Interest rate volatility also continued the upward trend of last week, with 3m10y parity swap options rising to the highest level since April. As of 3 p.m. Eastern time, the trading volume of US Treasury futures was 73% of the 20-day average, and European dollar activity was also lower than normal.
In general, although the US dollar remains strong, the price of gold is still supported by high inflation in the near term, and it is expected that it is expected to remain high in the short-term.
(Daily chart of the US dollar index)
GMT+8 8:44, spot gold was quoted at US$1,864.38 per ounce.
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