During the 47th meeting of the Joint Technical Committee (JTC), OPEC Secretary-General Mohammad Barkindo noted that crude oil demand will shift from reverse to forward gear and rise to 95.9 million barrels per day (bpd) this year, a gain of 5.9 million bpd from 2020.

Even so, the OPEC leader also raised concerns over the inventory levels while saying that inventory levels show positive momentum – though they remain stubbornly high. “Preliminary November data shows total OECD commercial oil stocks fell by around 24.8 million barrels m-o-m. The current levels are more than 205 million barrels higher than the same time one year ago and about 163 million barrels above the latest five-year average,” the official said.

Market implications

While oil traders are yet to return from their year-end holidays, cautiously positive comments from the Organization of the Petroleum Exporting Countries (OPEC) Secretary Barkindo can favor the energy benchmark ahead of Monday’s  the meeting of the Joint Ministerial Monitoring Committee (JMMC). It’s worth mentioning that the WTI holds gains above $48.00 off-late.

  • Gold gained over 30% in 2020, buyers attack five-month-old falling trend line.
  • Central bankers, US dollar weakness favor gold bulls but Brexit, stimulus hopes probe further upside.
  • Vaccine developments combat surging virus numbers, US politics is in the spotlight.
  • China’s Caixin Manufacturing PMI to decorate Asian calendar, risk catalysts keep driver’s seat.

Gold closed the books of 2020 with a bit over 30% yearly gains while taking rounds to $1,900. In doing so, the yellow metal extends recovery moves from November 30 to combat a falling resistance line from August 07, 2020. Although optimism surrounding the coronavirus (COVID-19) vaccine, Brexit headlines and the US covid aid package favor the commodity buyers, via US dollar weakness, bulls catch a breather in search of fresh clues as virus count keep fears of weak economics on the table.

US dollar bears dominate…

Be it the worsening virus conditions or optimism over the COVID-19 aid package, not to forget the Brexit deal and vaccine hopes, the US dollar had to bear the burden of all in 2020, making it the worst G10 currency during the previous year while taking rounds April 2018 low at last. Also favoring the greenback sellers were the easy money policy of the US Federal Reserve and central bankers elsewhere. The reason could be traced from rallying equities.

Recently, markets concentrate on the US politics where Nancy Pelosi has been re-elected as the House Speaker, which in turn favors the odds of easy money from the upcoming Democratic government. However, Georgia’s run-off can disappoint Democrats given their holdings in the Senate. It’s worth mentioning that the US policymakers are yet to finalize the $2,000 paycheck despite disbursing $600 and have already got President Donald Trump’s go for a bigger amount.

Read: Gold Price Forecast 2021: XAU/USD looks to build on 2020 gains with central banks staying dovish

Other than the US aid package news, global investors can also keep their eyes on the Brexit headlines and the month-start activity data. While the UK’s passage of Brexit trade deal with the European Union (EU) favors the sentiment, doubts over the future relations of ex-neighbors challenge the mood. Talking about activity numbers, after upbeat prints of December’s official PMI, China is up for releasing Caixin Manufacturing PMI data at 01:45 AM, expected to reprint 54.9, ahead of the Western releases.

The virus details suggest the global count keeps climbing with the UK and the US, followed by Japan, gaining major attention amid the recent surge in the cases and the death toll. While vaccinations are on, fears of another round of lockdownside, most of it has already started in Europe, question the mood.

Against this backdrop, Wall Street benchmarks closed 2020 with an upbeat tone with S&P 500 and Dow Jones ending the year at record top.

Moving on, gold traders will follow risk catalysts while also trying to justify any disappointment in data with a further pullback.

Technical analysis

Upbeat momentum indicators join a sustained break of 100-day SMA, at $1,894 now, to favor the bulls eyeing a break above a falling trend line from August 07, 2020, currently around $1,901. Also acting as an upside barrier is December 2020 top near $1,907. Meanwhile, a five-week-old ascending support line near $1,891 offers extra support to the downside past-100-day SMA.

 

  • AUD/USD consolidates recent gains amid a lack of major catalyst during early Asia.
  • Nancy Pelosi’s re-election as House Speaker and hopes of Democratic victory in Georgia’s runoff propel US stimulus hopes.
  • Virus conditions probe the bulls but vaccines tame the bears.
  • Chain’s Caixin Manufacturing PMI, risk catalyst will be in the spotlight.

AUD/USD drops to the intraday low of 0.7694, currently 0.7696, during the early Monday morning in Asia. The aussie pair seems to consolidate the heavy gains of 2020, after being the biggest gainer among G10 currencies, amid a lack of major catalysts ahead of China’s Caixin Manufacturing PMI and second readings of activity data from the western world.

Even so, the recently flashed Commonwealth Bank Manufacturing PMI for December eased below 56.00 initial forecast to 55.7 and can be probed for an immediate downside.

Market optimism favor bulls…

Despite the recent pullback in AUD/USD prices, buyers remain hopeful amid the coronavirus (COVID-19) vaccinations, increasing odds of the US covid stimulus and rallying equities.

Latest updates from Capitol Hill suggest Nancy Pelosi’s re-election as the House Speaker. Although the news failed to provide any immediate market reaction, it does favor the chances of $2,000 paychecks as stimulus-friendly Democrats are bracing to rule the US after their recent victory in the 2020 elections. It should be noted that Georgia’s electoral runoff is pending for a decision on the Senate’s control that assents all decisions before reaching to President.

Elsewhere, the virus numbers are jumping in Europe and have recently resurged in the Vitoria as well. Although vaccinations are rising by leaps and bounds in developed world countries, the rates of increase in cases and deaths are much higher.

Brexit optimism also stands in the line of positive catalysts and favor the AUD/USD bulls. However, doubts over the future relations between the UK and the European Union (EU) amid uncertainty over key terms, tease bears.

Amid these plays, Wall Street benchmarks ended 2020 on an upbeat tone with Dow Jones and S&P 500 closing at record top.

Moving on, China’s December month Caixin Manufacturing PMI is likely to remain unchanged at 54.9 while risk headlines may take some time to populate the feed as most traders are still enjoying the year-end festivities. Overall, AUD/USD remains strong but a short-term pullback can’t be ruled out.

Also read: AUD/USD Price Forecast 2021: Winning the covid crisis insufficient for the aussie to withstand Chinese boomerang

Technical analysis

Overbought RSI conditions and expected consolidation from multi-month high suggests a pullback in AUD/USD prices towards the mid-December 2020 top near 0.7640. However, a two-week-old ascending trend line near 0.7635 could restrict short-term downside. Alternatively, a sustained run-up beyond the year 2020 peak surrounding 0.7745 becomes necessary to recall the bulls targeting April 2018 high near 0.7815.

 

Here is what you need to know on Monday, January 4:

The dollar closed the year on a weak note and may remain under selling pressure. Wall Street kept advancing, adding pressure on the greenback. The DJIA and the S&P closed at record highs.

The shared currency eased on profit-taking but held above 1.2200 against its American rival. Commodity-linked currencies and the pound hold on to gains and could keep on rallying. The latter rallied on relief after the UK, and the EU clinched a post-Brexit deal.

Financial markets will likely return to normal this week, although some choppy trading is expected ahead of Friday when the US will publish the December Nonfarm Payrolls report.

The world continues to gyrate around the pandemic. The coronavirus is rapidly spreading globally, and restrictive measures are being announced, particularly in Europe. Immunization through different vaccines kick-started in December, but so far, roughly 12 million doses have been applied, according to Bloomberg. The total number of cases worldwide has surpassed 85 million, while the death toll is at 1.85 million. Restrictive measures are in place, and economic growth expected for the second half of 2021, may be delayed.

The dollar’s weakness and rallying equities underpinned commodities. Gold trades around $ 1900 a troy ounce, while WTI settled at $48.40 a barrel.

Cryptocurrencies keep rallying, with Bitcoin reaching $31,000 over the weekend.