US Open – Impeachment, Riksbank hike brews optimism for ECB, Oil, Gold

While the headlines over the past couple weeks make everyone feel like the stock market has been on fire with frequent fresh record highs, the S&P 500 index is only about 1.5% higher than it was around Thanksgiving.  Liquidity is likely going to fall a cliff over the remaining trading days leading up to the holidays and that could spell for some choppy and volatile moves. 


The first act of Trump’s impeachment saga was a long investigation that did not really see any major shifts along party lines.  Yesterday, the second act of the impeachment story went as planned with the House of Representatives impeaching President Trump on charges of abuse of power and obstructing Congress.   The third act in this story will take place next month with the Senate trial.  Markets should not see much of a reaction with the President’s impeachment saga as it is unlikely for the Democrats to get two-thirds of the vote in the Senate to convict Trump. 

Comparisons to President Bill Clinton’s impeachment is suggesting to many investors that we could continue to stocks outperform throughout the whole process.  During Clinton’s 5-month impeachment process that finished in February of 1999, the S&P 500 index gained over 26%.  Clinton however had much of his rally based on the dotcom bubble, while Trump has his based on massive stimulus from central banks globally. 

2020 is looking to be another banner year for US stocks, but we should not be surprised if we finally see a modest 2-3% pullback over the last couple weeks of the year. 


The Riksbank did it! They have reversed their negative rate policy and this is going to drive optimism that others will follow.  The 25bps point rate hike to zero is a one-and-done move as inflation is below their target and as growth continues to consolidate below the 2% level. 

The Riksbank’s rate hike is welcome news for the banks and the pension sector.  Sweden’s central bank will still remain accomodative as they are still going to deliver QE throughout next year and we should not see any additional hikes for at least a year. 

The eurozone, Japan, Denmark, and Switzerland are the four remaining central banks with negative rates.  Expectations will grow that we could see the ECB eventually go to zero under Christine Lagarde’s reign.  Higher rates for Europe and Japan will continue to depend on a global growth reflation theme that should happen in 2020. 


Oil prices have entered holiday mode and the recent rally is showing some signs of exhaustion following yesterday’s mostly bullish EIA crude oil inventory report.   Total petroleum supplied has improved recently and that should help support the demand side argument for higher prices.  It was not all bullish as seasonal stockpiles hit the highest levels since 1990. 

If West Texas Intermediate crude can continue to hold onto the $60.00 level as investors prepare for the end of year festivities, we could see price ultimately target $65 a barrel level on improved crude demand outlooks.


Gold entered holiday mode last week.  As US stocks remain near record highs, open interest on the Comex exchange in New York is also nearing its own record high.  Firm gold demand, a plethora of geopolitical risks, and a not too impressive outlook for earnings growth in 2020 should provide strong underlying support for gold prices.  Choppy conditions over the coming weeks could see the recent trading range widen to $1,470 to $1,490. 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

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. Prior to OANDA he worked with, 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, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.