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Dec

EU Man. PMI, U.S. ADP Report, ISM Man. Index

calendar 01/12/2021 - 08:20 UTC

The USD/TRY pair reached a new all-time high on Tuesday, bringing the total change in the exchange rate during November up to +41.4%. At the same time many other USD-Emerging Market rates like the USD/MXN, USD/ZAR and USD/RUB managed to move down from the recent high.

While Bitcoin traded relatively steadily over the past few days, Ethereum is on the rise and after moving up for five days in a row now is trading just around 1.7% below the previous all-time high. With this move the Bitcoin/Ethereum rate is at the lowest point since May 2018.

Most major stock market indices traded lower on Tuesday, retracing from the gains seen at the beginning of the week. The Volatility Index VIX is meanwhile still on the rise, trading with a significant upside compared to its position a month ago in the rolling VIX CFD contract.

On Wednesday manufacturing PMI data will be published for Germany and the eurozone, while from the U.S. the monthly ADP Employment Report, ISM Manufacturing Index and data on construction spending can be expected.

EUR/USD

During the afternoon the sudden spike in dollar markets pressured the EUR/USD pair briefly to levels below 1.125, while the pair managed to recover at least partially and traded again above 1.13 in the evening hours.

The statements by the Federal Reserve Chairman Jerome Powell before a committee of the U.S. Senate caused this sudden activity in the currency markets as he indicated that the central banking organisation can increase the speed of tapering the bond purchase program. Possibly even more significant was his intention to stop using the word “transitory” in regard to inflation and indicating intent to vigilantly control it. Many policy makers around the world have been touting rising rates of inflation as only transitory but might be waking up to the reality that inflation is actually starting to affect the real economy.

Eurozone consumer price index (CPI) data released on Tuesday indicated a further uptick in inflation, now at 4.9% year-on-year compared to 4.1% in the previous month. Italian CPI figures for the month of November showed an uptick once again by 0.7%. It remains to be seen if inflation rates would stabilise if energy commodity prices would stop rising or even drop as seen in recent days with oil prices.

EUR/USD

Gold

Gold prices were on the rise in the first hour of the U.S. trading session but came down hard with the broad market move following the hawkish comments from the Chairman of the Federal Reserve. On a monthly basis gold prices closed very slightly lower by 0.4%, while other precious metals like silver (-4.1%), platinum (-8.0%) and palladium (-12.6%) had more significant losses over the same timeframe.

In recent months some central banks were once again reported having increased their gold reverses. A report by Bloomberg outlined that Singapore increased its gold reserves by around 20% for the first time in more than two decades, while Reuters quoting IMF data reported that in October Kazakhstan, Russia, and Turkey increased their holdings compared to the previous month.

Gold

WTI Oil

Oil prices continued to decline to the lowest level since August, while on a monthly basis this was the worst performance since the prices crashed at the beginning of the pandemic in March 2020. Later on, in the evening hours prices managed to recover a small part of the daily losses. The weekly data from the American Petroleum Institute (API) released at that time however was probably not of significant impact with the weekly crude oil inventory decline amounting to roughly 0.75 million barrels, while at the same time gasoline inventories were up by 2.2 million barrels.

On Wednesday the Energy Information Administration (EIA) publishes its weekly data on crude oil, gasoline and distillate inventories.

It remains to be seen if countries organised in OPEC+ will continue increasing production levels as planned or would adjust given the recent plunge in market prices following concerns about a new COVID variant. Key members of this agreement Russia and Saudi Arabia however appear so far not inclined to change course over these developments.

WTI Oil

US 500

U.S. stock market indices like the US 500 traded lower on Tuesday, moving even below the low from Friday. This time however the move was possibly not only related to the emerging pandemic variant threat, but the comments from the Federal Reserve Chairman Powell. Powell appeared to be inclined to tighten monetary policy faster than most expected even after the recent shift in policy.

Amidst the broad market decline on Tuesday only two companies included in the S&P 500 index managed to close up with gains of more than one per cent. In second place came in Pfizer (+2.66%) but the stock outperforming all other companies in the index was Apple (+3.19%).

Beyond Meat (-5.79%) stocks continued plummeting to a new 19-months low, while November was the fifth consecutive month where the stock closed lower. In the earnings released last month the company failed to grow as fast as anticipated especially in the home market, while also experiencing delays rolling out its Chicken product, while some competitors managed to make faster moves.

On Wednesday quarterly results from companies including Snowflake, Okta, Splunk, CrowdStrike and Five Below can be expected, while on Thursday DocuSign, Dollar General and Kroger will publish their results.

US 500

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