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Market Update
Silver is the main story in financial markets on Monday morning after the metal staged yet another massive rally, gaining eight percent intraday, and also posting a large gap open after a record amount of interest towards the shiny metal over recent days.
XAGUSD is now testing towards the $29.00 level, with bulls no doubt setting their sights on the psychological $30.00 level. The reason behind the move higher in silver is being attributed to massive bets coming from retail traders, or more precisely forum participants from WSB, Facebook, and Reddit groups.
Reports also suggests that unprecedented amount of physical demand for silver, with many dealers noting that they are running dry on silver supply. It is difficult to see an end to this situation, especially as supply dries-up. The $30.70 and $32.0 areas are the big levels to watch above $30.00.
Gold has also received a notable bid on the latest move higher in silver and is probing back towards the highs of last week. Copper and Palladium have also started to follow the top two metals higher this morning.
China’s Caixin Manufacturing PMI reading came in weaker-than-expected over the weekend with a 51.5 reading, which is notably down on the previous months reading of 53.0. However, markets are focusing on China’s repo-rate, after it spiked to ten percent on Friday.
So far so good for the Chinese repo-rate, it has ticked-down to just over two percent today, relieving market tensions in Asia somewhat. Japan’s PMI Manufacturing headline number came in at 49.8 this morning, marking contraction.
The ASX200 in Australia finished higher today, marking its biggest one-day reversal in over ten-months. No clear bullish catalyst has been attributed to the move higher, however, short covering could be a reason ahead of tomorrow’s RBA meeting.
FX
Once again, the British pound is firming above the 1.3700 level against the US dollar this morning as the vaccine trade continues to propel sterling higher. This trade is likely to accelerate as Europe and the US struggle to implement the vaccine.
The Australian dollar is slightly lower on the day. The Australian dollar tested the $0.7600 level against the US dollar last week and is probably going to consolidate ahead of the RBA rate decision.
Following last weeks major breakout, the USDJPY pair is a big focus on the FX market. No great momentum in this trade at the moment, although all roads lead to 106.00 while bulls defend the 104.30 area.
The EURUSD pair is struggling to gain bullish momentum and is probably waiting to see the outcome of today’s ISM manufacturing report. Another big mover for the EURUSD pair this week will be Italy, rumours persist that former ECB President Mario Draghi could be headed for the top job in Italy. This is likely to be bullish for the euro in the short-term.
Indices
The FTSE 100 has been hammered over recent days and has fallen towards the 6,300 level this morning. The emphasis will be on further weakness in the index while the price holds below the 6,585 level.
The German DAX has a limited amount of movement this morning and has been under pressure over fears about a lack of COVID-19 vaccines in Germany, and the ongoing lockdowns. A weaker euro would probably be a boost for the DAX at the moment, and also some resolution in Italy would help stabilize the mood towards the eurozone’s largest economy.
Commodities
WTI and Brent oil continue to hold-the-line as the new trading month commences, following an extremely positive monthly price close. It is remarkable how much WTI and Brent oil continue to be absorbed on dips, and both look set to push higher.
Natural gas is holding up well and is attracting strong demand due to poor weather conditions in the United States. With more cold weather forecasted in North America Natural Gas looks set to build on last week’s gain.
Upcoming News
The economic docket today is dominated by final PMI Manufacturing readings in the Europe, and of course the ISM report in the United States. The ISM headline reading is expected to come in close to 60, which should be supportive for the greenback and US equity markets later today.
