English (India)
18
Nov

Inflation Data, EIA Oil Stockpiles, US Housing Starts

calendar 18/11/2020 - 08:41 UTC

A continued weakness of the US dollar was one of the headlines of the trading session on Tuesday. The weak greenback allowed the USD/CNH pair to fall to its lowest level since June 2018 and other emerging market currencies like the South African rand (ZAR) and the Russian rouble (RUB) improved against the greenback over the past days. However, the Turkish lira (TRY) continued to trade weaker, even against the dollar, having to give up gains from last week, when the market reacted to the shakeup at the helm of both the central bank and ministry of finance.

Despite the weakened dollar, gold prices stubbornly remained below the $1,900 mark, while platinum continued on its upwards trajectory.

Stock markets opened mixed by Wednesday morning as the enthusiasm about the progress made in terms of vaccine development against the COVID pandemic slowed down. Still, the Volatility Index VIX traded lower on Tuesday with the implied volatility of S&P 500 options remaining at the lowest levels since mid-August.

On Wednesday consumer price index data will be released in multiple major economies around the globe, including Canada, the United Kingdom and the European Union. From the US data on housing starts and permits for October will be come available, with estimates that the numbers will both continue to rise from the last reading. Then in the Asian-Pacific trading session the unemployment rate of Australia can be expected.

EUR/USD

While the EUR/USD pair continued to push higher, it should be noted that this move can be mostly attributed to the weakness of the US dollar, rather than the strength of the euro as the common European currency was performing rather poorly against other majors with the EUR/GBP pair and also the EUR/JPY pair on the downwards trajectory.

The Italian trade balance showed an improvement in September, with the trade surplus reaching €7.1 billion (previous reading €5.8 billion).

On Wednesday the consumer price index of the EU for October will be released, with expectations that the annualized deflation will remain at 0.3 per cent. From the US data on housing starts and permits can be expected.

EUR/USD

Bitcoin

The rally in Bitcoin, as well as in some other major altcoins continued as the biggest cryptocurrency by market capitalization, now amounting to more than $330 billion, jumped above the $18k mark for the first time since December 2017, when the first crypto craze of that year pushed the valuation of a Bitcoin above $19k. This time the situation seems to be different to some extent.

Bitcoin prices are supported by factors like mainstream adoption (PayPal allowing its US customers to buy, sell and store cryptos), as well as increased concerns about the viability of fiat currencies, given the unprecedented amount of monetary and fiscal stimulus unleashed earlier this year to get through the economically crippling impact of COVID-related lockdowns and the threat of more of this to come as the ‘second wave’ of infections hits the globe.

Performance in altcoins was also far from evenly spread. While in the past years for example the price moves of Bitcoin Cash oftentimes followed the moves of the original Bitcoin, now a clear disconnect can be observed as the weekly performance of Bitcoin cash is still marginally negative and Bitcoin prices gained almost twenty per cent over the same time-frame.

Bitcoin

WTI Oil

Oil prices were marginally down at the end of the day, possibly in part due to the reported increase in crude oil inventories by almost 4.2 million barrels over the past reporting week, according to data released by the American Petroleum Institute (API) on Tuesday in its Weekly Statistical Bulletin. Further data on crude oil, gasoline and distillate inventories can also be expected on Wednesday, when the Energy Information Administration (EIA) publishes its weekly statistics.

In the Short-Term Energy Outlook released by the EIA on Tuesday, it forecasted that crude oil production in the United States would remain mostly flat throughout the following year. Record production levels were seen in November 2019, when it reached 12.9 million barrels per day, while in May of this year production rapidly declined to just 10 million barrels per day.

WTI Oil

US 500

Major US stock market indices closed moderately lower, while the small-cap index US 2000 managed to end the day with a small upside.

Tesla (+8.29%) shares retained a sizable part of the after-hours gains from Monday evening, when it was announced that the company would finally be included in the S&P 500 index during the rebalancing in December. It was also recently reported that Tesla would stop selling its $35,000 Model 3 that was already before hard to find. The lower end of the electric vehicle market is becoming more and more crowded as established car manufacturers are starting to switch to electric engines given governmental pressure for low carbon dioxide emissions and Tesla thus has to face more and more competition.

Shares of the retail giant Wal-Mart (-1.93%) closed lower, despite the company reporting better earnings and revenue than anticipated, with adjusted earnings per share reaching $1.34. E-commerce sales strongly improved in the third quarter, gaining 79 per cent. However, this also meant that the number of visits to its stores significantly declined over this time-frame.

On Wednesday earnings from companies including the retailers Lowe’s and Target as well as Nvidia, Sonos, Bilibili and others can be expected.

US 500

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