News

Dollar Slips; US Futures Trim Losses, Georgia Elections Eyed

Equities

Major US stock index futures recovered slightly from the sharp losses incurred yesterday. The soaring coronavirus cases worldwide affected investors' risk appetite, as many governments chose to adopt strict rules on activity. Meanwhile, investors are looking forward to Georgia run-off, whether the democrats will succeed in having a blue sweep, which would make it easier for them to pass more relief funds, or the republicans will hold their control. The Dow Jones Industrial Average futures traded above 30200, the S&P500 futures recovered to 3700, and Nasdaq futures inched higher to 12700.

USD

The dollar index, which measures the U.S. dollar strength against a basket of major currencies, drifted lower to 89.68, surrendering partial gains. Market participants are looking forward to the results of the Georgia elections, which would draw some insight into the possibility of passing further relief funds in the future. The EURUSD rallied to $1.2276, and the GBPUSD recovered to $1.3612.

Metals

Precious metals prices held prior gains with elections in focus. If Democrats can control the House of Senates, it will be much easier for them to add fiscal stimulus in the future, which along with monetary stimulus, boosted gold demand this year. The price of a gold ounce is hovering near an eight-week high of $1,945, the price of a silver ounce rallied to $27.45, and palladium futures held steady near $2400.

Oil

Oil prices declined significantly as top oil producers failed to reach an agreement over February production. In December, OPEC+ agreed to reduce production cuts by 500,000 barrels instead of 1.9 million barrels to sustain market stability. Since January has started, OPEC+ added 500K barrels in supply and kicked-off a meeting yesterday to decide whether to increase an additional 500K in February. Until now, producers failed to reach a deal. Some producers want to increase production, such as Russia, while others are afraid of the impact of the current Covid19 wave on demand, such as Saudi Arabia. Negotiations will continue today. The West Texas Intermediate crude February delivery fell to $47.31, and Brent blend March delivery dropped to $50.54.

Major Economic Events

GMT Country Event Expectation Previous

8:55

EZ

German Unemployment Change (Dec)

10

-39

15:00

US

 ISM Manufacturing PMI (Dec)

56.5

57.5

21:30

US

 API Weekly Crude Oil Stock

-

-4.785

 

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