The dollar rose on Wednesday and the yen fell in choppy trading, giving up some of the previous day's gains when an unexpected policy change from the Bank of Japan pushed the yen up 4% against the dollar.

Precious Metals

Gold prices were flat on Wednesday, holding above the key $1,800 level, with expectations of slower U.S. interest rate hikes providing support, but a rising dollar limited further gains.

David Meger, head of metal trading at HighRidgeFutures, said, "We believe that the trend is still sideways to higher, and the market is focusing on the view that the Federal Reserve's interest rate hikes in early 2023 are coming to an end."

Since falling to its lowest level in more than two years at the end of September, gold has risen by nearly $200, and expectations surrounding the Fed's slowdown in interest rate hikes have weakened the appeal of the dollar. After raising interest rates four consecutive times by 75 basis points, the Fed gradually slowed the pace of interest rate hikes to 50 basis points in December. Fed funds interest rate futures traders expect interest rates to peak around 4.85% in May before falling to 4.37% by the end of the year.

Spot silver fell 0.4% to $24.08 an ounce, platinum fell 0.8% to $999.11 and palladium fell 3.1% to $1,678.84.

Crude oil

Oil prices rose more than $2 on Wednesday after data showed a larger-than-expected decline in U.S. crude inventories, but gains were limited as the United States faced a snowstorm that was expected to affect people's travel plans.

Data from the U.S. Energy Information Administration (EIA) showed that U.S. crude oil inventories decreased by 5.89 million barrels, compared with an estimated decrease of 1.66 million barrels. Market participants said data released by the American Petroleum Institute (API) on Tuesday showed that inventories fell by 3.1 million barrels in the week to December 16.

PriceFutures analyst PhilFlynn said: "This report is very bullish, especially the decline in crude oil inventories, and the continuous increase in distillate oil inventories stopped before the cold wave hit." EIA data showed that distillate oil inventories decreased by 242,000 barrels, and analysts estimated an increase of 336,000 barrels.

Meanwhile, Saudi Arabia’s energy minister said on Tuesday that OPEC’s much-criticized move to cut oil production had proven to be the right decision. CMCMarkets analyst Tina Teng said the comments suggested OPEC+ could continue to keep supply tight. OPEC+ is an alliance of oil-producing countries formed by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Heavy snow is expected in many parts of the United States, which could delay flights and make roads impassable during the busiest travel season of the year, which could dampen oil demand.

Forex

The dollar rose 0.4% against the yen on Wednesday, after plunging 3.8% in the previous session, the largest one-day drop in 24 years. The yen fell in choppy trade on Wednesday, giving up some of its gains from the previous day, when an unexpected policy change from the Bank of Japan pushed the yen up 4% against the dollar. The Bank of Japan decided to allow the 10-year government bond yield to fluctuate 50 basis points above and below the 0% target, which is a wider range than the previous 25 basis points.

John Doyle, vice president of trading at MonexUSA, said: "I think yesterday's trend was reasonable, but maybe a little too big, so it is natural for to pull back a little bit today."Given the magnitude of the dollar's move against the yen on Tuesday, traders should expect volatility in the currency pair," Doyle said.

Strategists attributed some of the move to poor liquidity ahead of the holidays. "The yen's move was overdone," said Marc Chandler, chief market strategist at Bannockburn Forex. A lot of people got the short end of the stick, and with liquidity thin during the holiday season, not a lot of people wanted to get in right away. I think the dollar has peaked. I don't think it will reach 150 (yen) anytime soon. "

The theme of 2022 is the strong dollar, the Federal Reserve's rapid interest rate hikes, and geopolitical tensions, causing investors to seek less risky currency havens, pushing the dollar to rise sharply.

The Bank of Japan has long focused on restoring price growth to avoid the risk of deflation, and has been unique among major central banks this year. The Bank of Japan has maintained negative interest rates, while other central banks have vigorously raised interest rates to suppress them. Control inflation and support the exchange rate of the domestic currency against the US dollar.

Sterling fell against the dollar and euro on Wednesday as British public borrowing hit a record high in November, underscoring challenges facing the British economy. Sterling fell 0.8% to $1.2091.

The Canadian dollar was little changed against the U.S. dollar, at about 1.3595 Canadian dollars, as investors were uncertain whether the Bank of Canada would tighten policy further in January, following mixed inflation data for November.

Market News

European Commission approves Germany’s 49 billion euro economic support plan

On December 21, local time, the European Commission approved a 49 billion euro economic support plan for Germany. Under the program, financial assistance will take the form of direct grants through which the German government will reimburse energy suppliers after they reduce electricity, gas and heating bills for eligible beneficiaries. of subsidies. European Commission Executive Vice President Margrethe Vestager said many industrial and business sectors in Germany have been hit by rising energy prices. The €49 billion support package will allow Germany to mitigate the impact of rising energy costs on its economy and temporarily protect electricity, gas and heat consumers from extreme price increases. (CCTV News)

The State Post Bureau conducted a special study on smooth postal express service.

On December 21, according to the State According to news from the Home Post Bureau, Director of the State Post Bureau Zhao Chongjiu presided over a special meeting to make arrangements for the current work of ensuring smooth flow and supply of the national postal express industry and effectively meeting the people's delivery needs. The meeting requested that postal management departments at all levels should urge delivery companies to assume their social responsibilities, , not stop services in some areas, and not arbitrarily limit the flow of collections at the front end. For terminal outlets that were shut down due to the impact of the epidemic in the early stage, business outlets should be opened as much as possible to keep postal express network services as smooth as possible. National Post The political bureau will daily report on the operation monitoring status of major brand express delivery companies across the country, and promote companies to implement their main responsibilities.

China's central bank : Increase financial support for domestic demand and supply systems

China's central bank pointed out that it will increase financial support for domestic demand and supply systems. Give full play to the functions of monetary and credit policy tools to strongly support the recovery and expansion of consumption, key infrastructure, and major projects in line with the national development plan. Project build . Adhere to the "two unwavering principles", insist on treating all types of ownership enterprises equally, guide financial institutions to effectively strengthen and improve financial services, increase support for private small and micro enterprises, and further solve the financing problems of private small and micro enterprises. Continue to promote bond financing support tools for private enterprises and support their reasonable bond financing needs. Make good use of monetary policy work It has the dual functions of total volume and structure, guiding financial institutions to increase support for areas such as "agriculture, rural areas and farmers", technological innovation, green development, and inclusive elderly care. (Central Bank of China)

Japan welcomed nearly 1 million tourists in November

Data released by the Japan National Tourism Administration on Wednesday (December 21) showed that 934,500 tourists entered Japan in November, nearly double the 490,000 in October.However, compared with the pre-epidemic period in 2019, the number of inbound tourists during the same period was only one-third of the pre-epidemic number. Japan has been closed for more than two years due to the coronavirus epidemic. It was not until October 11 that it resumed visa-free measures for short-term stays in most countries. Inbound tourists then rebounded rapidly. Coupled with a weak yen, traveling to Japan has become even more attractive.

Kazakhstan’s oil production in 2023 is expected to be 90 million tons

According to Kazakhstan News Agency’s report on the 20th, Kazakhstan’s Energy Minister Polat Aksholakov said on the same day that Kazakhstan’s oil production in 2023 is expected to be 90 million tons. According to sources, Akshoglakov said that if this output can be achieved, Kazakhstan will be able to export 71 million tons to 72.5 million tons of petroleum products. He also said that the planned oil export volume this year was originally 68 million tons, but due to a series of accidents and failures, the export plan dropped to 66 million tons to 65.5 million tons.

Kazakhstan’s Ministry of Foreign Affairs: The Russia-Kazakhstan-Uzbekistan natural gas alliance is currently only in the conceptual stage

On December 21, local time, Kazakhstan’s Deputy Minister of Foreign Affairs Aidarov said that the prospects for the implementation of the natural gas alliance initiative proposed by Russia to Kazakhstan and Uzbekistan will depend on a variety of objective conditions. Under the initiative, the three countries will jointly coordinate the transportation of natural gas within the three countries. Aidarov said that the integration of Eurasia region is the integration of governments and is based on treaties between governments and countries. The Three-Nation Natural Gas Alliance initiative proposed by Russia has not yet signed any agreement, and Russia has not given any specific details or implementation form. The initiative is currently only at the conceptual stage of collaborating on gas trading.

India extends trading halt on major agricultural futures by one year

India's market regulator on Tuesday extended the trading halt on commodity derivatives contracts including wheat, rice and crude palm oil to December 20, 2023. The Securities and Exchange Board of India (SEBI) last year ordered a year-long suspension of futures trading in major agricultural commodities as the world's largest importer of vegetable oil and a major producer of wheat and rice struggled to curb food inflation.

This article comes from Huitong.com