Thread: ForexMart's Forex News

November 23. Trump criticized the current US energy policy

Former US President Donald Trump criticized the policy pursued by the current head of the White House Joe Biden in the energy sector. Trump noted that the United States is at the mercy of OPEC, and gasoline prices in the domestic market of the country continue to rise.

The former American president said that earlier for decades, strategic oil reserves in the United States were very low, since no president was engaged in replenishing them. During the Trump presidency, the reserves were replenished as much as possible, and they were intended for use in serious, emergency situations, for example, in the event of war. Biden's current policy seems outrageous to Trump.

«We were energy independent one year ago, now we are at the mercy of OPEC. Gasoline is selling for $7 in parts of California, going up all over the country, and they are taking oil from our Strategic Reserves. Is this any way to run a country?», Trump was indignant.

Recall that today Joe Biden announced the release of 50 million barrels of oil from the strategic reserve in order to lower commodity prices. It is noted that China, India, Japan, South Korea and the United Kingdom also intend to use oil from their national strategic reserves.

November 24. Japan also announced the sale of reserve oil

Japanese Prime Minister Fumio Kishida officially announced the decision to print part of the national oil reserve in response to similar actions by the United States and Biden's request to join the sale of oil reserves in order to stabilize world prices.

Kishida noted in his interview: «So far, we have been cooperating with America to stabilize the global oil market, so our country is keeping pace with the United States and in that form, as long as it does not violate the law.» The Prime Minister also stressed that stability of oil prices is a very important task for economic recovery after the pandemic.

Moreover, the Japanese authorities do not intend to limit themselves to these measures. Japan plans to work with oil-producing countries, take measures to support the agriculture and fisheries sectors, as well as measures aimed at mitigating the sharp rise in gasoline and oil prices.

Recall that yesterday US President Joe Biden announced the release of 50 million barrels of oil from state reserves in order to lower prices for this raw material. In addition, India also confirmed its plans to release 5 million barrels of oil from its strategic reserves.

November 25. Emerging Markets shares break 6-day decline

Most emerging market currencies strengthened on Thursday, and stocks broke their six-day decline. The EM currencies were supported by the weakening of the US dollar after the rally caused by the tightening of the monetary rhetoric of the US Federal Reserve.

In particular, the Turkish lira rose to 11.99 per dollar, continuing its recovery after a long period of falling to historic lows at 13.45. The collapse of the lira was triggered by the actions of President Tayyip Erdogan, who called on the Central Bank to lower interest rates even in the face of a sharp rise in inflation.

The South African rand rose 0.4% to 15.84 per dollar. The Ukrainian hryvnia showed little fluctuation, staying close to its 13-week low. On the eve, Ukraine launched a «special operation» near the border with Belarus in order to strengthen the defense of its borders and prevent the migration crisis.

The Hungarian forint rose 0.5% against the euro, while the Polish zloty rose 0.3%. The MSCI stock index is up 0.1% after falling nearly 3% in the past six sessions.

Today the US Treasury and US equity markets are closed for Thanksgiving, so trading volume is expected to be low.

November 26. European markets in the red due to concerns about a new strain of coronavirus

On Friday, European stock indexes are falling as news of the newly identified new Covid-19 strain raises fears of another powerful blow to the global economy. Experts believe that the new strain may be resistant to vaccines.

As a result, the pan-European STOXX 600 index fell by 3.3% to 468.72, showing the worst session in more than a year. The British FTSE 100 index also fell by 3.3%, to 7,091.10. The German DAX index fell to 15,426.10, and the French CAC 40 – to 6,806.76.

According to experts, the new strain found in South Africa, Botswana and Hong Kong is still poorly understood. But there are already suggestions that it has an unusual combination of mutations and can evade the immune response, and is also possibly more contagious.

Shares of tourism and leisure companies fell by 6.5% after the UK banned flights from South Africa and several neighboring African countries. Travel restrictions from these countries have also been imposed by Japan, Italy and Singapore.

November 29. Serbia will save €1 billion thanks to the price of Russian gas

Serbian President Aleksandar Vucic said that the republic will be able to save about €1 billion due to the gas price set during negotiations with Russian President Vladimir Putin.

At the meeting of the two heads of state, an agreement was signed on an oil formula, which «did not always look as attractive as it does today». This formula, at an oil price of $82-83 per barrel, allows you to pay about €270-275 per 1 thousand cubic meters of gas. And this, as Vucic noted, is a huge saving for all citizens of Serbia. The price of €270 will remain for the next six months.

The Serbian leader also declared his readiness to continue working to maintain the lowest gas prices in Europe. While the average European gas price ranges from €650 to €1200 per 1,000 cubic meters, Serbia pays €270. Such a low price became possible due to the fact that Serbia had previously built the Balkan Stream main gas pipeline with a length of 402 km.

Serbian Foreign Minister Nikola Selakovic said that the agreement concluded between Moscow and Belgrade is historic, and the policy course based on respect for international law and Vucic's diplomatic relations with other world leaders has become a guarantor of Serbia's long-term development and prosperity.

November 30. Oil dropped below $71 for the first time since September

During trading on Tuesday, Brent oil quotes declined to $70.23 per barrel. The $71 level was broken for the first time since September 10. American WTI oil is also showing a decline – to the level of $67.09 per barrel.

Subsequently, prices recovered somewhat. The current Brent quote is $71.22 per barrel, WTI oil is $68.05.

Pressure on the market was exerted by the US statement that Washington does not intend to reconsider its decision to release oil from the country's strategic reserve, despite the fall in prices due to the appearance of a new omicron strain Covid-19. Recall, on November 23, the United States announced the release of 50 million barrels of oil from strategic reserves in order to reduce fuel prices for Americans. In addition to the States, India, Japan, South Korea and the United Kingdom made a similar decision.

Prices for «black gold» are also declining amid concerns caused by the spread of a new strain of coronavirus. The head of the drug manufacturer Moderna shared his doubts about the effectiveness of existing coronavirus vaccines against the omicron strain.

At the same time, due to the uncertain prospects for oil demand, expectations are growing that OPEC + will abandon the planned increase in oil production by 400 thousand barrels per day in January. And if the organization still decides to pause in increasing production, the oil market will receive a significant driver for strengthening.

December 2. In focus: OPEC meeting and the Fed's «Beige Book»

At the end of yesterday's trading session, the US stock market fell sharply after US health officials announced the discovery of the first confirmed case of omicron, a strain of coronavirus, in the country.

What will affect the dynamics of the market today?

First, we should pay attention to General Motors, which announced yesterday the creation of a joint venture with South Korean Posco Chemical Co Ltd to build a plant in North America. The plant will process critical materials for batteries for the GM Ultium electric vehicle platform.

As you know, General Motors has recently decided to gradually switch to electric vehicles, and collaboration with South Korea will help the company take control of the supply chain. Analysts of the automaker expect that for the full year profit before tax will reach about $ 14 billion, which is higher than previously forecast (from $11.5 to $13.5 billion).

Further, the results of the two-day OPEC meeting will be of interest. Today, the cartel will meet to make a decision on production in January, after the participating countries agreed to gradually increase the supply on the market.

The Joe Biden administration, which has been pressing OPEC to increase production, said it could adjust the timing of the planned release of strategic oil reserves. However, only if world energy prices fall significantly.

The Federal Reserve's Beige Book was published last night. According to her thesis, the US economy continues to be under pressure due to supply chain disruptions, labor shortages and inflation. At the same time, enterprises managed to raise prices to compensate for price pressure against the background of high consumer demand.

December 1. FED announced plans to accelerate taping

Chairman of the US Federal Reserve Jerome Powell said that at the December meeting of the Open Market Committee, the timing of the completion of the bond purchase program will be discussed. The regulator may complete the program several months ahead of schedule, given the good state of the economy, the shortage of workers in the labor market and high inflation.

Such a «hawkish» tone of Powell's comments took market participants by surprise, and also somewhat cooled the rally of US Treasury bonds. Stock indexes also rushed down: the S&P 500 index fell to 4,567.00, the Dow Jones fell to 34,483.72, and the NASDAQ – to 15,537.7.

Recall that in November, the Fed began to reduce $120 billion in monthly purchases of Treasury bonds and securities at a pace that would allow it to complete the winding down by mid-2022. Recently, an increasing number of Fed representatives have been advocating the end of asset purchases in the spring of next year. They are confident that this option will allow them to start raising key rates earlier, if the situation with rising inflation requires it.

Powell notes that the current inflation rate is twice the Central Bank's flexible target of 2%. And if earlier it was possible to apply the term «transitory issue» to high inflation, now this is no longer the correct definition for current levels.

December 3. Non-farm Payrolls disappointed the markets

According to the monthly Non-farm Payrolls report, the number of people employed in the US non-agricultural sector increased by only 210 thousand in November after an increase of 546 thousand in the previous month. This indicator turned out to be significantly lower than analysts' expectations (573 thousand).

At the same time, despite the large shortage of personnel, the unemployment rate decreased from 4.6% to 4.2%. At the same time, the labor force participation rate increased over the month to 61.8%, which is the highest since March 2020.

The Labor Department noted that the U.S. economy created far fewer jobs than expected in November, before the threat of a new Covid strain roiled markets and raised concerns about a slowdown in economic growth in the winter.

The sectors that showed the largest increase in November include professional and business services (90 thousand), transport and warehousing (50 thousand), as well as construction (31 thousand). Retail trade decreased by 20 thousand employees, even though the holiday shopping season is approaching.

Gold finally started to rise

The Fed's hawkish intentions continue to put pressure on gold. Nevertheless, metal finds the strength to move forward. After the growth last Friday, the asset is also in the green zone this morning.

The precious metal looked like a complete outsider last week. According to its results, bullion fell by 0.1%, showing the third consecutive weekly drop.

Analyst James Hatzigiannis stressed that at this stage, the main obstacle for gold is growing concerns about potential deflation.

Last week, Fed Chairman Jerome Powell exerted more pressure, saying that the regulator may raise the issue of accelerating the pace of reducing asset purchases during the next meeting.

This prospect adversely affected the value of the noble asset. The precious metal suffered the most significant losses on Thursday, when it plunged by 1.2% and reached the lowest value since mid-October.

The situation changed dramatically on Friday. Gold changed its direction upward after the release of statistics from the US labor market.

The data on the number of jobs created in November turned out to be disappointing. Economists assumed that the indicator would grow by about 550 thousand, but it increased by only 210 thousand.

Slower job growth indicates an uneven recovery in the labor market. This is a positive factor for gold, as it may prevent the transition to a more aggressive policy of raising rates.

On a wave of optimism, gold's price increased by 1.2%, or $21.20, at the end of the working week, reaching the level of $1,783.90.

Despite Friday's growth, gold still continues to trade below the psychologically important mark of $ 1,800. It was not possible to break through it due to the fact that the data on the US labor market were ambiguous.

Stock markets rebound as risk-on mood returns

Risk sentiment returns to the markets. After being gripped by the uncertainty surrounding the new virus strain for the past couple of weeks, the markets finally breathed a sigh of relief.

US chief infectious disease expert Anthony Fauci recently told CNN that so far the Omicron strain does not pose a serious threat to the population. However, analysts at ING, the largest banking group in the Netherlands, still urge investors to stay alert: "Although the markets are already tired of the news about Omicron, this does not reduce the danger of a new strain for both the population and the global economy."

Fauci's encouraging announcement brought risk sentiment back to the markets. As a result, global stock indicators jumped sharply on Tuesday as traders shifted their attention from safe-haven currencies and bonds to riskier assets. Thus, the demand for the shares of companies that are directly or indirectly related to the tourism sector began to rise again. At the same time, pharmaceutical companies involved in the production of vaccines have faced some selling today.

The shares of Norwegian Cruise Line Holdings Ltd (up 9.51%), Royal Caribbean Cruises Ltd (up 8.2%), American Airlines Group (up 7.9%), and others were on the rise today. Meanwhile, Pfizer (down 5.1%), Moderna (down 13.5%), BioNTech (down 18.7%), and AstraZeneca (down 1.67%) went into negative territory.

For the first time since February, the FTSEurofirst 300 index had added almost 1% by the time the article was published. European stocks were also gaining ground, with Germany's DAX trading higher by 2.10%, France's CAC 40 rising by 2.35%, and Britain's FTSE 100 adding 1.19%. The US dollar was growing against the Japanese yen, and even the Australian dollar was in high demand. This market recovery was possible thanks to Dr. Fauci and his positive statement.

Also on Monday, China's central bank was reported to make another attempt to stimulate its economy first time since July. The Chinese regulator is going to fulfill its plan by reducing the amount of cash held in bank reserves.

Diversified Chinese investment holding Evergrande is currently on the brink of a crisis, thus maintaining uncertainty in the real estate sector in China. However, based on the strong imports data of China's largest real estate operator, there is strong domestic demand in the country today. Evergrande shares jumped by 1.7% from yesterday's record low.

Australia's S&P/ASX200 was up by 0.95% today, while Japan's Nikkei increased by 2.1%. The main Asian index MSCI (excluding Japan) was down by about 5% this year. Hong Kong markets are showing the biggest losses, while India and Taiwan stocks look more profitable.

The US stock indices were also showing rapid growth at the beginning of the trading session. The Dow Jones Industrial Average increased by 1.23%. The Standard & Poor's 500 Index climbed by 1.79%, and the Nasdaq Composite jumped by 2.45%.