Thread: ForexMart's Forex News

January 4. Prospects of the precious metals market

In 2021, everything except precious metals rose in price: oil jumped in price by 55%, copper increased by 25% over the year, and inflation in the United States reached a 40-year high of 6.8%. At the same time, gold not only did not grow, but also lost about 4% in price over the year.

In fact, there is quite a logical explanation for this. The gold market is under pressure from the tightening of monetary policy by the US Federal Reserve. Market participants fear that the beginning of a cycle of interest rate increases will inevitably play against gold. Which leads to the fact that the market begins to look for more profitable instruments.

Many investment banks have already submitted their forecasts for 2022. In particular, JPMorgan expects an average gold price of $1,630 per ounce in 2022. Deutsche Bank is more conservative and expects $1,750 at the end of the year. The current price of an ounce of precious metal is $1808.

However, there are also those who hold more positive views on the dynamics of gold, expecting its value in the new year at the level of $ 2000-2100 per ounce. Investors believe that the «fashion» for risky assets will not always be relevant, so when gold becomes a sought-after asset again, its value can easily grow by 15-20%. Especially after a bad year.

There are many reasons that can change the vector of the direction of gold: there is an out-of-control inflation, new Covid strains and restrictions, as well as geopolitics and general tension in the world.

January 3. What awaits the oil market in the new year

During the first trading day of the new year, the oil market demonstrates a multidirectional movement, first continuing the decline that began at the end of the past year, and then sharply jumping up. The current Brent quote is $78, WTI oil is trading at $75.38 per barrel.

The pressure on prices is exerted by the continuing concern of the market about the fall in demand due to the new strain of the omicron coronavirus. At the same time, analysts note that due to mass vaccination in 2021, the threat of Covid in the world has significantly weakened, and by the end of 2021, Brent has grown by 34%, and WTI – by 38%. The growth was mainly due to the gradual lifting of restrictions on air travel and tourism and, accordingly, the growing demand for oil.

Predicting the movement of the oil market in 2022, analysts note that the periodic appearance of new strains of coronavirus may cause the resumption of lockdowns and restrictions in certain countries and sectors of the economy. Therefore, the oil market situation in the new year will not be too stable, and the market is waiting for sharp price fluctuations.

Another risk for the oil market in 2022 may be an increase in oil production in the United States. According to the IEA forecast, the supply of oil will also increase sharply in Canada and Brazil, and this will mean that there will be an excess supply of oil in the market of 2 million b/d, of which 1.1 million b/d will be for oil production in the United States.

Tomorrow, January 4, a regular meeting of the ministers of the OPEC+ member countries will be held, at which the parameters of the implementation of the current agreement on increasing oil production by 400 thousand barrels per day will be discussed, and quotas for January will also be set. Most likely, they will remain unchanged – the same as in December 2021. However, if the threat of new, more dangerous Covid strains persists, OPEC+ may temporarily suspend production increases due to uncertainty about future oil demand.

For 2022, we predict that the price of Brent oil will move on average in the range of $65-$90 per barrel, and during the first quarter of 2022 – in the range of $69-79 per barrel.

January 5. Europe may be left without gas in two months

Experts note that against the background of the energy transition, gas reserves in the EU turned out to be insufficient, which could lead to the fact that by the end of winter, the level of reserves in storage facilities could fall to a historic low of 15%.

Today, Europe is in the midst of the so-called energy transition – countries are closing coal-fired power plants, thereby increasing dependence on renewable energy sources. And although wind and solar energy is much cleaner, these sources are fickle: last year, electricity generation in Europe fell sharply. And since there are still two cold winter months ahead, gas in European countries may simply run out.

Storage facilities in Europe are 56% full, which is 15 percentage points lower than the average for ten years. According to analysts, if Russia does not increase gas supplies, by the end of March, the level of reserves in Europe will drop to 15%, which could be the lowest in history. Experts note that without additional supplies of Russian gas via the Nord Stream-2, 2022 will be another unstable period for European prices for blue fuel.

Last year, exchange prices for gas in Europe broke several records. On December 21, the cost of fuel for the first time exceeded $2 thousand for 1 cubic meter . This was caused by a decrease in pumping through the Yamal-Europe gas pipeline, information about the launch of Nord Stream 2 no earlier than the second half of 2022, as well as news about a possible cooling in Europe.

January 10. Wall Street futures decline in anticipation of further inflation in the US

Monday began with a decline in futures on major US stock indexes. Pressure on the market is exerted by the expectations of statistics, which should confirm the continued acceleration of consumer price growth in the United States.

In particular, futures for the Dow Jones Industrial Index (DJIA) declined by 0.02% to 36102 points, futures for the S&P 500 broad market index – by 0.11% to 4662.75 points, and the NASDAQ high–tech index – by 0.29% to 15536 points.

Consumer price statistics in the United States will be published on Wednesday. Analysts suggest that last year's inflation was 7%, which will be the highest since 1982. A month earlier, annual inflation in the United States reached 6.8%.

Experts note that the stronger-than-expected growth in average wages in the country reinforced the inflation expectations of investors. If the forecasts turn out to be correct, the US Federal Reserve will have to start raising the discount rate earlier than planned.

However, the tightening of monetary policy is unfavorable for nominal stock prices. High-tech companies, whose value depends more on future profits (which, in turn, is closely related to «cheap» money in the economy), may suffer the most. Therefore, NASDAQ futures are getting cheaper more significantly than other indices.

January 11. Gold rises in anticipation of Powell's comments

The price of gold on Tuesday is rising for the third session in a row amid a decline in the dollar and treasury yields ahead of a speech by the head of the US Federal Reserve Jerome Powell. Market participants are confident that the regulator will start raising interest rates very soon, which puts pressure on the US currency exchange rate.

The spot price of gold rose today to $1.810 per troy ounce, subsequently declining to $1.805.

The yield on 10-year Treasury bonds retreated from a near two-year high, and the dollar declined against its main competitors.

Jerome Powell promised to prevent further acceleration of already high inflation. And it is the inflationary rhetoric of the policy that will be the central topic of the hearings in the banking committee devoted to the consideration of Powell's candidacy for a second term at the head of the Fed.

In addition to Powell's speech, markets are waiting for tomorrow's data on consumer prices in the United States: the index is expected to have grown in December by 5.4% year-on-year compared to November's 4.9%.

Palladium has risen in price today to $1,937.78 per ounce, silver – $22,710 per ounce, and platinum – up to $950,00.

January 12. The first bitcoin transaction is 13 years old

Exactly 13 years ago, on January 12, 2009, the creator of bitcoin under the pseudonym Satoshi Nakamoto made the first transaction in cryptocurrency, sending 10 BTC to cryptographer Hal Finney. Hal Finney played a crucial role in the history of bitcoin, and according to one version, he was the creator of the cryptocurrency. Since then, 700 billion transactions have been made.

The first BTC transaction was confirmed in block #170. The cost of the cryptocurrency received by Finney was almost zero. According to him, the cryptographer extracted several blocks on his own personal computer. Since then, cryptocurrency mining has become an industry in which specialized high-performance devices are used, and the hashrate of the network exceeds 170 EH/s.

However, currently, the solo mining of cryptocurrencies continues. Yesterday, an unknown miner with an equipment capacity of 126 TH/s included block #718124 in the blockchain. Experts note that the probability of this event was less than 0.0001%. The anonymous miner received a reward of 6.25 BTC. As you know, in 2009, 50 BTC was charged for the extracted block, but this figure is halved approximately every four years.

In December 2021, miners mined 90% of bitcoin. Analysts note that the cryptocurrency is expected to reach the issue limit of 21 million coins in 2140.

13.01. Oil is growing after the publication of reserves statistics

On Thursday, the price of oil continues to rise, despite the appearance of quite alarming signals. The current Brent quote is $84.75, North American WTI oil is trading near $82.50 per barrel.

Yesterday, industry statistics from the US Department of Energy were presented, and the data came out somewhat ambiguous. In particular, according to the weekly report, oil reserves in the United States decreased by 4.6 million barrels, which turned out to be better than forecasts. Production decreased by 100 thousand b/d to 11.7 million b/d.

At the same time, gasoline stocks jumped by 8 million barrels at once, exceeding the average level for 3 years. Moreover, the level of oil refining remained stable, and the loading of the refinery even decreased slightly, from 89.8% to 88.4%. This may mean that the growth of gasoline stocks is associated with the weakness of demand. If this turns out to be a temporary phenomenon, then oil prices will remain high. Otherwise, alarm signals may begin to put pressure on oil prices.

Brent and WTI are supported by the general weakness of the US dollar after the release of inflation data. The growth of consumer prices in the country reached 7% (in November, inflation was 6.8%), which was the highest since 1982. Against this background, the DXY dollar index showed an impressive drop, updating two-month lows.

January 17. Oil jumped to a three-year high

The price of Brent crude oil on Monday jumped sharply to a three-year high at $86.69 per barrel. The cost of a barrel of North American WTI oil has risen to $84.09 (the maximum since November 10, 2021).

The main support for the oil market is provided by expectations that supply will remain limited against the background of curbing production by major producers, and global demand will not suffer from a wave of infections with the Omicron coronavirus strain.

Analysts note that bullish sentiment persists, as OPEC+ does not provide sufficient supply to meet high global demand. And if investment funds increase the share of crude oil, prices may reach 2014 highs.

Experts are also confident that a summer surge in demand is inevitable ahead, especially in Europe and the United States, which may be greater than last year (if the hopes that Omicron will finally turn the Covid-19 pandemic into an epidemic are justified).

However, during the day, Brent quotes declined slightly, to the level of $85.60 per barrel, amid an increase in production in Libya. According to the National Oil Corporation of the country, the total volume of oil production has returned to the level of 1.2 million barrels per day. Recall that last week production in Libya was about 900 thousand barrels per day due to the blockade of western fields.

January 14. European stock exchanges decline on Friday

According to Friday's trading data, Europe's main stock indexes are declining after the release of data on the first monthly trade deficit in the eurozone in almost eight years. A similar indicator in the UK, which is now not part of the euro area, is fixed at almost zero.

The German DAX index declined during the day to 15,833.73 points, the French CAC 40 – to 7,119.01 points, the British FTSE 100 – to 7,523.02 points.

European macro statistics exerted pressure on the stock market. Thus, the deficit of the foreign trade balance of the eurozone countries in November amounted to 1.5 billion euros after a surplus of 3.6 billion in October. At the same time, analysts expected a surplus of 7.6 billion euros. The European statistical Agency Eurostat also noted that the trade deficit was recorded for the first time in a month since January 2014.

It is also worth noting that the stock markets of Europe repeat the dynamics of the American and Asian ones, which closed mainly in the red (due to news about the deterioration of the epidemiological situation in these countries).

January 20. Cryptocurrencies are declining on expectations of a tightening of the Fed's policy

Since the beginning of the new year, the cryptocurrency market has been showing steady weakening amid expectations that the US Federal Reserve System will soon begin to tighten monetary policy.

The bitcoin exchange rate has decreased by 9.3% since the beginning of the year, and the Ether exchange rate, the second largest cryptocurrency after bitcoin, by 14.5%. The current BTC quote is $43,308.60, and the Ether quote is $3,253.92.

The Fed is expected to raise the base interest rate in March and raise it at least three times in 2022. Some experts suggest that the rate increase in March may amount to more than 25 basis points. However, these are only assumptions, but market participants are waiting for «hawkish» comments from the Central Bank's leaders at the Fed meeting on January 25-26.

At the same time, the dynamics of bitcoin is likely to remain volatile as a result of «hawkish» rhetoric, as analysts note.

The negative dynamics of cryptocurrencies also affected the shares of companies related to the industry. For example, the price of Coinbase Global Inc. securities has dropped by 13% since the beginning of the year, Marathon Digital Holdings Inc. – by 24.4%, Riot Blockchain Inc. – by 21.7%.

January 24. Bitcoin skids to a 6-month low

During Monday's trading session, the bitcoin exchange rate continued the fall, which began at the end of last week. The current quote of the cryptocurrency is $33.483. The last time such price values were recorded a half year ago, in July 2021.

Since the beginning of the week, bitcoin has lost about 9%. Analysts say the main reason for the fall is the decline in the value of shares of the largest technology companies. In particular, the head of Tesla, Elon Musk, lost $25.1 billion, the head of Meta (former Facebook), Mark Zuckerberg, became poorer by $ 10.4 billion, and Changping Zhao, the owner of the Binance cryptocurrency exchange, lost $17.7 billion.

In turn, the reason for the decline in the securities of technology giants was the widespread spread of the omicron strain, as well as the prospect of lower interest rates in the United States and the growth of instability in the world. At the same time, the main pressure on the crypto market was caused by fears of a military conflict between Russia and Ukraine – recently it became known that the United States and Great Britain began to withdraw diplomatic representatives from Ukraine.

Many analysts predict a further decline in the value of the most popular cryptocurrency – up to $ 20 thousand.

January 25. Nikkei falls to 5-month low

The Japanese Nikkei stock index closed near a five-month low on Tuesday due to investor caution amid the situation on the border with Ukraine, the expansion of inflation risks and concerns about a faster-than-expected increase in the US Federal Reserve interest rate.

The current index value is 27.131.34 points, which was the lowest since August 20. During the trading session, the Nikkei declined to 26.890.94 – the lowest since December 29.

The broader Topix index dropped to 1.862.62. The Mothers Index of startups has fallen to its lowest level since April 2020.

Analysts note that the main driver of the downward dynamics of the index was the decline in the value of shares in the Japanese technology sector. In particular, the securities of the investor in startups SoftBank Group fell by 5.34%, shares of the manufacturer of equipment for creating chips Tokyo Electron – by 2.69%. NIDEC lost 4.44%.

The monetary policy of the US Federal Reserve also has an important impact on the index. A two-day meeting of the US regulator starts today, and investors assume that there is a small chance that the central bank will unexpectedly announce a rate hike from January.

Additional pressure on the Nikkei is also exerted by geopolitical tensions related to the buildup of Russian troops on the border with Ukraine. Yesterday it became known that NATO is putting its troops on alert and strengthening its positions in Eastern Europe with additional ships and fighters.