Market Overview

On December 8th, the US dollar index slightly rose in volatile trading, taking a breather after hitting a two-year and a half low in last week's sell-off, while the decline in the pound narrowed. The market still holds hope for a deal to be reached in the Brexit trade negotiations. Spot gold has hit a new high of $1875.38/ounce since November 23, supported by a decline in US bond yields and expectations for a new round of stimulus plans. The oil price has not changed much, and the market is waiting for progress in economic stimulus plans and vaccines.

01

gold

On Tuesday (December 8th), COMEX February gold futures closed 0.5% higher at $1874.90 per ounce. The decline in US bond yields and expectations for a new round of anti epidemic rescue stimulus plans have pushed gold futures to their highest closing level in three weeks. Fawad Razaqzada, market analyst at ThinkMarkets, said: "In the context of the decline in treasury bond bond yields and investors' awareness that interest rates will remain low for a long time, gold prices find new support."

Tai Wong, head of metal derivatives trading at Bank of Montreal in Canada, pointed out that the volatile trend of gold prices indicates that the market is trying to find a short-term equilibrium point. At present, the market is still bullish, especially after recovering from the key $1850 level the day before, volatility has become stronger and buying has become more active. However, after the recent strong performance of gold prices, continuing to rise may still require support from some additional factors.

On the daily line, the Bollinger Belt's three tracks are slightly closing down, the MA5 moving average and the MA10 moving average are moving in a golden cross, the K-line is trading near the upper part of the Bollinger medium track, the MACD fast slow line is moving in a golden cross below the zero axis, and the red kinetic energy is gradually increasing. The KDJ three track golden cross is slightly closing down, and the daily line market is relatively high; On the 4-hour chart, the Bollinger belt runs upward with an opening, with the MA5 moving average and MA10 moving average closing at a golden cross. The K-line is trading near the MA5 moving average between the upper and middle tracks in Bollinger, and the MACD fast and slow lines close at a golden cross above the 0 axis. The KDJ turns to a dead cross, and the gold short line slightly drops, but the market is still relatively high.

Overall, intraday operations are mainly low. The initial resistance above is around 1880, and the further resistance is around 1890; The initial support below is at 1860, and further support is at 1850.

02

crude oil

On Tuesday (December 8th), WTI January crude oil futures closed down 0.16 US dollars, a decrease of 0.35%, at 45.60 US dollars per barrel; Brent February crude oil futures closed up 0.05 US dollars, or 0.10%, at 48.84 US dollars per barrel. The price of crude oil has not changed much. On the one hand, the market is weighing the demand risk brought by the increasing number of COVID-19 infection cases, and on the other hand, it is also looking forward to the introduction of more stimulus measures and the use of vaccines.

The US stock market has reached a historic high, with news suggesting that Republican congressional leaders plan to discuss the pandemic relief plan with the White House; At the same time, further progress in vaccine launch has also provided additional support for oil prices.

Jay Hatfield, CEO of InfraCap in New York, stated that the key to oil demand is to control the epidemic before the summer travel peak; You will hear some bad news about the epidemic, but it will be offset by good news about the vaccine. Whether oil prices can further rise will largely depend on the speed at which vaccines are widely available to the public.

Follow the EIA crude oil inventory data for the week from 23:30 tonight to December 4th in the United States. On the early morning of December 9th Beijing time, API crude oil inventory unexpectedly increased by 1.14 million barrels, leading to a rapid decline in the short term for American Oil.

On the US crude oil daily line, the Bollinger Belt's three tracks are closing up, the MA5 moving average and the MA10 moving average are running smoothly, the K-line is trading near the MA5 moving average between the upper and middle tracks of Bollinger, and the gold cross above the MACD fast and slow line's 0 axis is closing up smoothly. The red kinetic energy gradually decreases, and the KDJ's three tracks turn into a dead cross, causing high fluctuations in the daily market and weakening the upward movement; On the 4-hour chart, the Bollinger belt has a three track upward closure, the MA5/MA10 moving average has a dead fork closure that is close to bonding, the K-line intersects near the Bollinger middle track, the dead fork above the MACD fast and slow line 0 axis eases closure, and the KDJ three track switches to a gold fork, causing short-term fluctuations in oil prices.

Overall, the short-term operation is mainly characterized by low to high resistance, with initial resistance around 46.0 above and further resistance at 46.5; The initial support below is around 45.0, and further support is at 44.0.

03

American Finger

The US dollar index rose 0.1% to 90.96, supported by positive vaccine news from Johnson&Johnson and Pfizer on Tuesday, boosting risk appetite, but the US dollar held on to its gains. After the majority leader of the US Senate, McConnell, earlier refused to support a cross party proposal, it is reported that he and the White House discussed the rescue plan. So far this year, the US dollar has fallen by nearly 6%, potentially recording its weakest annual performance since 2017. Axel Merk, President and Chief Investment Officer of Merk Investments, stated that the monetary and fiscal stimulus measures we see will lead to global reflation, which will weaken the US dollar and should be beneficial for risk and emerging market currencies.

04

Europe and America

So far this year, the euro has risen by about 8% against the US dollar. Dominic Bunning, head of European foreign exchange research at HSBC, wrote in his latest research report that the strength of the euro is even stronger than this summer, which may be a problem for the European Central Bank; A stronger currency will tighten the financial environment, which is very unfavorable for an economy facing sustained deflationary pressure.

06

Pound beauty

At the same time, investors continue to pay attention to the negotiation of the UK Exit Trade Agreement. With only three weeks left until the end of the transition period between the UK and the EU, the leaders of the UK and the EU have been unable to narrow their differences on trade agreements. However, the decline in the pound narrowed and briefly turned positive after the UK stated that it had reached an agreement with the EU on how to manage the border between Ireland and Northern Ireland. The pound fell 0.19% to 1.3355 against the US dollar in late trading. The implied volatility of the pound hit an eight month high. This sign indicates that traders are preparing for fluctuations.

Option traders still hold a cautious view on the negotiation results, with 1-cycle volatility hitting its highest level since April. Ned Rumpeltin of Dao Ming Bank stated that if an agreement cannot be reached, the pound may test 1.2675 against the US dollar; If a positive agreement is reached, it may rise to the resistance zone of 1.3660 to 1.3715 or be very close to that area.

07

Euro Pound

The euro rose 0.14% to 0.9063 against the pound; Kit Jukes from Faxing Bank stated that "if negotiations are cancelled," it could reach 0.95; I wouldn't be surprised if the euro/pound would soon return to a level close to 0.85. The only thing I'm not sure about is how to bet on the chances of these two outcomes