EU Industrial Production, Fed Chair Powell Testimony, EIA Oil Stockpiles
The US dollar stopped its advances against other major currencies with the USDX trading lower on Tuesday. The NZD/USD pair jumped higher on Wednesday night, when the Reserve Bank of New Zealand announced its interest rate decision, with rates remaining unchanged at 1.0% as expected, while analysts expect a rate hike the earliest some time in 2021.
With equities continuing on their recovery, gold prices went down on Tuesday and Wednesday morning. On the other hand oil prices further rebounded, despite the uncertainty over possible further OPEC+ production cuts and a sizable increase in oil stockpiles over the last week according to data from the API.
Most major cryptocurrencies also continued on the uptrend of the past weeks, with Bitcoin testing the $10,500 level by Wednesday morning. However compared to the second most important cryptocurrency by market capitalization – Ethereum, which gained roughly fifteen percent over the past 24 hours, Bitcoin might be seen as lagging behind, while the Bitcoin/Ethereum pair is at 7-months low.
On Wednesday European industrial production data for December will be released. After the highly negative development in December in the key economies of Germany, France and Italy according to data released this and last week, analysts expect also an overall decline for the EU as well.
The Chairman of the Federal Reserve, Jerome Powell, will continue with his testimony presenting the Semiannual Monetary Policy Report to Congress, now in front of the Banking Housing And Urban Affairs Committee of the Senate.
Also on Wednesday, the Energy Information Administration (EIA) publishes weekly stockpile data for crude oil, gasoline and other oil derivatives
With the US dollar seen as slightly weakened, the EUR/USD pair was able to remain above 1.09 for most of the day, with the brief plunge towards around 1.089 being followed by an equally strong recovery.
On Wednesday the industrial production statistic for the EU will be released. Later in the afternoon a testimony of Fed Chairman Jerome Powell is expected. More significant data can be expected towards the end of the week on Friday, when EU trade balance and GDP will be presented, as well as retail sales and industrial production data in the US.
With the market continuing on the upbeat trend from last week, the Europe 50 index reached yet another all-time record high.
ABN Amro opened sharply lower as the Dutch bank reported unchanged profits compared to last year as the low interest rates and loan impairments in certain sectors are said to be affecting its results. While the bank reduced its dividend payment from €0.80 to €0.68, the bank’s CEO promised a focus on costs in the next years, which could be lowered thanks to the transformation of its IT structure.
Heineken on the other hand managed easily to jump above €100 per share on market open as the brewery expects to improve both revenue and profitability, with costs anticipated to fall in part due to lower barley and aluminium prices.
On Wednesday among others Akzo Nobel, Altice and Unibail-Rodamco are releasing their quarterly results.
With the overall market sentiment again bullish, as equities raced towards new records, oil prices managed to stabilize higher on Tuesday despite the significant increase of crude oil stockpiles being reported by the American Petroleum Institute (API), whose data that was released in the evening hours showed oil stockpiles again up, now by six million barrels compared to the previous week.
Besides the uncertainty factor of the continued production shutdowns in China amidst the COVID-19 epidemic markets could also react to Russia’s decision whether or not to support the proposed further production cuts among OPEC+ participants. Last week the Joint Technical Committee of the bloc suggested to reduce production by 600,000 barrels per day, while at this time Russia appears to be the only major player hesitant to decide on that proposal.
On Wednesday the EIA publishes its weekly crude oil, gasoline and distillate stockpile data, with analysts expecting also higher inventories to be reported also by the EIA for the past week.
Stock markets continued to rise towards new records despite the coronavirus epidemic still ravaging China and unprecedented quarantine measures shutting down a significant number of factories. However, analysts see the markets rather complacent on the China-risk, seeing the central banks to be able to step in if the situation worsens and stimulate the markets, like the PBoC did in the previous week.
Lyft shares were down in after-hours trading, only marginally above last week’s close and erasing a sizable part of its gains from Monday, when the stock price jumped higher on positive analysts’ ratings. While the company managed for the first time ever to exceed one billion dollar in quarterly revenue, investors might have been disappointed to hear that Lyft is still planning to attain profitability only by the end of 2021 compared to Uber (+3.10%), where the company expects to reach EBITDA profitability in the last quarter of this year.
On Wednesday companies including CVS Health, Cisco Systems and Shopify will present their quarterly results, followed by Nvidia, Alibaba, Roku, Expedia and PepsiCo on Thursday.
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