Oil softer on supply concerns, gold higher on stimulus hopes, bitcoin consolidates

Oil under pressure over OPEC+ impasse

Crude prices are slightly softer after OPEC+ was unable to signal any optimism that the Saudis and UAE are any closer in delaying the 1.9-million-barrel daily supply increase that will take place in January.  Adding to the pressure on oil was yesterday’s API report that showed a surprise 4.1-million-barrel build, as analysts eyed a draw of 2.4 million barrels. This morning’s EIA crude oil inventory is expected to post a 1.9-million-barrel drop with inventories.

Energy markets will remain on edge until OPEC+ gets passed tomorrow’s meeting, but if the EIA crude oil inventory report shows a strong increase in production, it might be hard for the UAE to support an extension of the current production cuts.

Oil prices should continue to have underlying support as vaccine makers announce start dates for beginning immunizations.  The UK approval of Pfizer’s COVID vaccine and news that it will be available next week has everyone excited.

Gold stays in positive territory, Swiss franc climbs

Gold prices are quickly giving back gains as the dollar rebounds as Brexit approaches a make-or-break moment in securing a trade deal.  Some investors were anticipating a much softer ADP report raise expectations for a disappointing NFP report, but that was not the case.  For Congress to act swiftly and deliver more than USD500 billion in stimulus, the labor market needs to show a much more significant slowdown in hiring.  Gold’s bullish outlook remains intact but could be vulnerable to dollar strength that stems from European geopolitical events.  The dollar could have a couple of waves of strength if the ECB talks down the euro and as Brexit tensions intensify.

The Swiss franc is the top-performing currency today as a modest risk aversion session is triggering safe-haven flows.  When you look at the dollar against the Swiss franc, the 0.9000 has been strong support for much of the year until now.  The current break could see further momentum if Wall Street grows cautious over the short-term outlook.

Bitcoin volatility continues

Bitcoin continues to consolidate below the USD20,000 level as several new crypto investors anxiously await the next bullish catalyst.  Bitcoin is volatile today following a slight risk-off morning on Wall Street.  Many crypto investors are focused on the ECB and Fed policy decisions that will occur over the next couple of weeks.  Both central banks could unveil more accommodation that could drive the macro crypto trade.

Volatility will remain elevated as momentum traders are eyeing both the USD18,000 and USD20,000 level.  The bullish trend appears to be intact as institutional interest remains elevated for bitcoin.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya