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.

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