English
13
Jan

US Inflation, EU Industrial Production, EIA Weekly Data

calendar 13/01/2021 - 10:12 UTC

While the US dollar had to give up some of its previous gains, among the major currencies the move of the pound sterling (GBP) was one of the more noticeable market moves. The GBP/USD pair reached as high as 1.37 by Wednesday morning after gaining more than one per cent on Tuesday.

The weakness of the greenback also allowed for emerging market currencies to recover with the USD/RUB pair opening more than 1.3% down on Wednesday compared to the opening levels seen on Tuesday. For the Russian rouble the rally in the oil prices could also have been a positive factor. A barrel of Brent crude oil was traded for the first time in more than 10 months above $57 on Wednesday.

Crypto markets were trading overall lower on Tuesday, with Bitcoin trading even trading in the $32k region around midnight GMT on Wednesday. By morning however major cryptos pushed higher, with Bitcoin briefly trading even above $35k.

Major stock market indices traded mixed with little change by Wednesday morning after during the previous day US indices like the US 500 closed almost unchanged and European markets like the Germany 30 or the Europe 50 posted moderate losses.

On Wednesday European and Italian industrial production data from November can be expected. In the US consumer price index (CPI) data for December will be released. Later in the evening the Treasury budget level for December will be published.

EUR/USD

Thanks to the relative weakness of the dollar, the EUR/USD pair managed to climb again above the 1.22-threshold. In terms of fundamentals, investors might look out more closely at the developments in the fixed income markets as the 10-year US Treasury note benchmark reached as high a 1.18% on Tuesday before retracing later to lower levels.

Italian retail sales data was quote disappointing for November as it was down by 8.1 per cent in November compared to the same time of the previous year. The US NFIB Small Business Optimism Index also significantly deteriorated in the reading for December, falling from 101.4 to 95.9.

On Wednesday industrial production data will be released for Italy and the EU. Also on Wednesday the President of the ECB Christine Lagarde will participate in an online Q&A session.

EUR/USD

Gold

Precious metals including gold and silver managed to stabilize and close with a modest gain on Tuesday. One factor driving the market prices higher could have been the weaker dollar, which in theory makes these precious metals more affordable in non-dollar markets.

Investors might also focus on the rising inflation forecasts, while yields on US Treasury notes were up again on Tuesday as well. On Wednesday CPU data from December will be released. It is expected that the annualized CPI will increase in December to 1.3% on an annualized basis compared to the 1.2% in the previous reading.

Gold

WTI Oil

The oil price rally continued, pushing the price of WTI crude to yet another high since February 2020. Analysts explained that the weaker dollar might have contributed to the continued positive sentiment in the market, while prices received another support late on Tuesday with the release of the weekly statistical bulletin of the American Petroleum Institute (API) as it showed that over the past reporting week crude oil inventories were down by 5.8 million barrels, which was more than what most expected.

Even the release of an estimate by Petro-Logistics that OPEC+ countries’ compliance with production quotas fell to just 75%, which was the lowest level since the start of the OPEC+ agreement, was not enough to deter the bullish sentiment.

On Wednesday weekly data from the Energy Information Administration (EIA), which will include statistics on crude oil, gasoline and distillate inventory changes.

WTI Oil

US 500

Major stock market indices managed to recover from the intraday low on Tuesday and close almost unchanged at the of the day. Some of the best-performing stocks were found in the energy sector (US Energy ETF +3.92%) given the recent surge in prices of energy commodities.

One of the best performing stocks in the market was the food delivery company DoorDash (+15.86%), whose stock price reached a new all-time high, for the first time surpassing the high from the first trading day after the IPO and continuing the series of gains. On a weekly basis the stock is by 34%. Analysts see the reports that the company is looking to establish operations in Japan as a factor for the recent gains, pointing that the country’s restaurants only operate food delivery services.

Another outperforming stock was Docusign (+9.23%), which is most known for its eSignature products. The stock of the company jumped to the highest level since September of last year after announcing an offering of $500 million to refinance its operation and use proceeds for the use as working capital and “other general corporate purposes”.

Investors can now prepare for the upcoming earnings season, with major Wall Street banks including Citigroup and JPMorgan Chase releasing their quarterly results on Friday.

US 500

The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.