News

Saudi's Voluntary Output Cut Sends Oil Prices Higher

Oil

Oil prices raced higher on OPEC+ meeting outcome. With the current revolving fears of a drop in demand due to the COVID19 spread, market participants expected a rollover to the 500K barrels agreed cuts. However, Saudi Arabia announced an additional voluntary cut of 1 million barrels per day in February and March to sustain the market stability while allowing Russia and Kazakhstan to increase their output by a total of 75,000 barrels. The Saudi Energy Minister stated that this move would support the market if demand drops, and boost recovery if demand remains stable. The Russian Energy minister commented that the Saudi decision is a "great" new-year gift. The West Texas Intermediate crude February delivery rose to $50.22, and Brent Blend March delivery rallied to $54.06.

USD

The dollar index, which measures the greenback against a basket of major currencies, drifted lower to 89.27, the lowest since April 2018, as investors await Georgia elections. If the Democrats control the House of Senates, it will be much easier for the Biden Administration to pass its plans that include further fiscal stimulus. Riskier currencies witnessed significant flow on bolstered risk sentiment. The AUDUSD rallied to $0.7797, the highest since April 2018, the EURUSD climbed to $1.2324, and the GBPUSD inched higher to $1.3658.

Equities

Major US stock index futures continued to recover from Monday's sharp losses awaiting Georgia elections. A Democrat control would support an additional flow of funds to the economy that could lead to fresh rallies. The Dow Jones Industrial Average futures rose to 30435, the S&P500 futures edged higher to 3733, while Nasdaq futures remained under pressure, trading near 12600.

Metals

Precious metals held prior gains as the dollar weakened further while US yields jumped. The US 10-year yields rallied to 1.027%, the highest since the 20th of March 2020, imposing risks to the current gold rally. The price of a gold ounce held steady near $1950, the price of a silver ounce hovered near $27.40, while palladium futures rallied to $2484.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 Services PMI (Dec)

47.3

47.3

9:30

UK

 Services PMI (Dec)

49.9

49.9

10:00

EZ

 PPI (MoM) (Nov)

0.1%

0.4%

13:15

US

 ADP Nonfarm Employment Change

75

307

14:00

UK

 BoE Gov Bailey Speaks 

-

-

15:30

US

 Crude Oil Inventories

-1.271

-6.065

19:00

US

 FOMC Meeting Minutes 

-

-

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