Macro Roundup (Dec 31)

Published: Dec 31, 2020 09:08 (GMT+8)
The euro, Aussie and New Zealand dollars all posted more than two-year highs against the struggling greenback on Wednesday as investors bet on more U.S. fiscal support and positioned for year-end in light trading volume.

SHANGHAI, Dec 31 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The euro, Aussie and New Zealand dollars all posted more than two-year highs against the struggling greenback on Wednesday as investors bet on more U.S. fiscal support and positioned for year-end in light trading volume.

Investors are betting that an improving economic outlook as COVID-19 vaccines are rolled out and unprecedented fiscal and monetary stimulus will boost global growth and asset prices in 2021.

U.S. economic growth is expected to drag behind peers, however, with the U.S. currency also suffering from rising fiscal and current account deficits as the government increases spending to tackle coronavirus-related business shutdowns.

Overnight on Wall Street, the Dow Jones Industrial Average gained 73.89 points to close at 30,409.56. The S&P 500 rose 0.1% to end its trading day at 3,732.04 while the Nasdaq Composite climbed 0.2% to close at 12,870. Wednesday’s moves marked the fourth positive session in five for both the Dow and S&P 500.

Oil held steady on Wednesday as a U.S. coronavirus fiscal aid package and a decline in crude oil inventories supported prices.

Brent crude futures gained 0.49% to settle at $51.34 per barrel, and U.S. West Texas Intermediate (WTI) crude advanced 0.83% to settle at $48.40 per barrel.

“Oil prices have remained supported by a weaker U.S. dollar overnight and have finally found a friend in the API inventory report,” said Stephen Innes, chief global market strategist at Axi, a broker.

“This morning the American Petroleum Institute reported a much larger draw versus consensus in crude oil inventories for the week ending December 25.”

Gold prices edged higher on Wednesday, as the prospect of increased fiscal aid pushed the dollar to its lowest in more than two years, although global COVID-19 vaccine rollouts and increased risk appetite limited bullion’s gains.

Spot gold rose 0.3% to $1,883.41 per ounce by 09:53 a.m. EST (1453 GMT). U.S. gold futures were up 0.2% to $1,887.40.

“The U.S. dollar index touched a new low - that’s working in favour of the gold and silver market,” said Kitco Metals senior analyst Jim Wyckoff. “However, upbeat risk appetite in the market place, evident by stock indexes at or near record highs is tempering buying enthusiasm. You’ve got this tug and pull at work right now.”

On the coronavirus front, the vaccine developed by the University of Oxford and AstraZeneca received authorization on Wednesday for emergency use in the U.K. Still, the U.K. government outlined plans on Wednesday to impose stricter coronavirus restrictions on millions of people across England as a new strain of the virus spreads across the country.

Key economic data slated for release today include China official manufacturing purchasing managers’ index (PMI) for December and US initial claims for unemployment benefits in the week ended December 26.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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