Another relatively quiet trading day with the dominance of COVID-19 infections moving the markets most. There will be some economic data to look forward to in the afternoon and the forex markets have started more risk-on with commodity pairs showing relative strength in the London session.
Today the European Central Bank released its report for monetary developments in the euro area (November 2021), which details how much money is in the system and whether it is contracting or expanding. The money aggregate measure in M3 and M1 both decreased month-on-month but the loans to non-financial corporations, households, and the private sector continue to expand from the 2020 lows. This is good news for the Euro Area as new loans indicate economic expansion.
The EURUSD, Bunds, and DAX index were in the red at the start of today’s London session, as Italy, the United Kingdom, Spain, and France saw record daily increases in COVID-19 cases the day prior.
German 10-year yields have been dropping since October 2021 and have been weighing on the euro. Because of the rising COVID cases across Europe, Germany announced it has purchased a million doses of an antiviral drug developed by Pfizer Inc. with the first shipment expected in January. The EURUSD has now broken below the 1.1300 level and that means there could be a move towards the 1.1200 though the only European news to come out before the new year is Spanish CPI tomorrow.
Following last night's U.S. crude oil inventories report, the Brent contract moved sideways. Private data from the American Petroleum Institute (API) showed inventories decreased by 3.09 million barrels in the week ending December 24. Reserves in Cushing, Oklahoma, allegedly increased by 1.6 million barrels. According to the report, gasoline stockpiles dropped by 319,000 barrels, while distillate inventories declined by 716,000 barrels.
The precious metals were in focus last night with retail traders complaining of manipulation by the bullion banks. Gold prices rejected the $1820 level to trade back to the $1800. Silver had made its way to $23.415 but is now over a dollar lower.
In the US session, we receive some US data with Goods Trade Balance and Preliminary Wholesale Inventories up first before Pending Home Sales and Crude Oil inventories after the open.