2020-12-22 • Updated
The new Covid-19 strain has been found in the United Kingdom. The new virus variant appears to be 70% more contagious than other strains. The market sentiment immediately worsened after the report. As a result, investors poured their capital into safe-haven assets like the USD, the JPY, and the CHF. The USD was the number one reserve currency this year. It has started to lose its dominancy due to the vaccine rollout and the global recovery. However, fears of the new wave of stricter global lockdowns increased the demand for the USD.
"With EUR/USD already pressuring key tactical support near 1.2175, if this fails to hold, the bulls may beat a retreat to the key 1.2000 area," says Saxo Bank.
EUR/USD dropped enormously yesterday. However, the 50-period moving average at 1.2165 limited the further falling. If the pair plummets below the psychological mark of 1.2200, the way down to the 50- moving average of 1.2180 will be open. However, the pair shouldn’t cross this strong support as it has failed to break through the 50-period MA many times since early November, that’s why we can expect the pullback to the upside. Resistance levels are 1.2240 and 1.2270.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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