☆ OPEC publishes monthly crude oil market report, exact time to be determined.
☆ At 10:00, China releases Q4 annual rate of GDP, China annual GDP growth rate for 2022, and China annual GDP total for 2022. China 2022 National Economic Performance Conference is held.
☆ At 15:00, Germany publishes the final monthly rate ofCPIfor December.
☆At 18:00, Germany publishesZEW economic sentiment indexfor January, Eurozone publishes ZEW economic sentiment indexfor January.
☆ At 21:30, U.S. New York Fed Manufacturing Index for January.
☆ The following day 04:00 Fed's Williams gives a welcome speech at the meeting.
Market Overview
Review of Global Market Trend
On Monday, January 16, U.S. stocks and bonds were closed for a day for Martin Luther King Day. Trading in CME's precious metals and U.S. crude oil futures contracts ended early at 03:30 on the 17th.
The dollar index touched 101.78 in early Asian trading on Monday, which was the lowest since June 2022; it then recovered to close up 0.17% at 102.35. Offshore and onshore yuan recovered the 6.70 handle against the dollar at one point.
Crude oil fell more than 1% intraday, with WTI crude falling from above the 80 mark to close down 1.25% at $79 per barrel; Brent crude fell below the $85 and $84 marks in quick succession intraday to close down 1.62% at $83.98 per barrel. European natural gas accelerated its decline, with the price of Dutch TTF natural gas futures on the Intercontinental Exchange falling more than 15% intraday and accumulating a decline of up to 27% for the year.
Spot gold surged as high as $1,928.95 per ounce in early Asian trading before falling back below the $1,920 mark to close down 0.22% at $1,916 per ounce. Spot silver managed to hold the $24 mark, closing up 0.04% at $24.29 per ounce.
European stocks continued their strong rally, which was the best performance in the last two weeks on record. Most European stock indices closed higher on Monday, with Germany's DAX30 closing up 0.30%, the UK's FTSE 100 closing up 0.19%, France's CAC 40 closing up 0.28%, the Euro Stoxx 50 closing up 0.16%, Spain's IBEX 35 closing down 0.14% and Italy's FTSE MIB closing up 0.46%. The Euro Stoxx 50 has entered a technical bull market and the UK FTSE 100 reached its pre-epidemic high.
Spot Hot in the Market
1. The annual meeting of the World Economic Forum in 2023 opened on the 16th in Davos, a small town in the eastern part of Switzerland, with the theme of “Strengthening cooperation in a divided world”.
2.A cargo ship sailing from Ukraine to Istanbul ran aground in the Bosporus Strait, resulting in the temporary closure of traffic in the Strait.
3.From February 1, Russia reduced the oil export tax to 12.8 US dollars/ton.
Geopolitical Situation
Conflict situation:
1. According to the Ukrainian State News Agency, 17 Russian warships are still carrying out combat missions in the Black Sea, including 6 equipped with “caliber” cruise missiles, which can launch about 30 missiles in total.
2. According to the Russian satellite network, the number of unmanned aerial vehicles shot down in Sevastopol, Crimea, increased to 10, and no facilities in the city were damaged.
3. The death toll of the Russian missile attack in Dniporo, Ukraine, rose to 40 on Saturday. Zelensky said that the attack highlighted the need for new and faster coordinated decisions on the supply of weapons to Ukraine.
4. The Russian Defense Ministry said that the Russian army destroyed a “hail” multiple rocket launcher vehicle and multiple howitzers of the Ukrainian army; Intercept 7 “Haima” and “Hurricane” multiple rocket shells; Shoot down three Ukrainian drones in Lugansk.
5. The general staff of the Ukrainian armed forces said that the Ukrainian armed forces had repulsed the Russian army's attacks near 16 settlements in Donetsk and Lugansk. The Ukrainian air force carried out nine strikes against the Russian military personnel concentration area and two strikes against Russian air defense facilities.
Energy situation:
1. From February 1, Russia reduced the oil export tax to 12.8 US dollars/ton.
2. Deputy Prime Minister Novak of Russia: Russia's oil production will increase by 2% to 535 million tons in 2022, and exports will increase by 7%.
3. Russian Ministry of Finance: from December 15 to January 14, Ural crude oil averaged $46.82/barrel, down 19% from $57.5/barrel a month ago.
4. Last week, Russia's seaborne crude oil exports soared to the highest level since last April.
5. The Kremlin: Putin and Erdogan confirmed cooperation, with priorities including Russia's natural gas supply and the establishment of a regional natural gas hub in Türkiye.
Assistance:
1. Ukraine and Japan signed an agreement to postpone the payment of US $50 million of debt.
2. The EU and Ukraine signed a memorandum of understanding to lend 18 billion euros to Ukraine this year; Uzbekistan is expected to receive the first batch of 3 billion euros this week.
3. British Defense Secretary: Britain will provide Ukraine with 100 armoured vehicles, including bulldog armoured transport vehicles.
4. Ukrainian Minister of Digital Transformation: Dozens of “Star Link” satellite communication terminals and more than 80 unmanned aerial vehicles have been handed over to the Ukrainian army in Bakhmut.
5. The German Defense Force began to deploy three sets of Patriot anti-aircraft missile systems originally located in Germany to Poland.
Institutional Perspectiv
01
Goldman Sachs
Commodities have the best prospects among all asset classes and are expected to be similar to the soaring market in 2007-08.
Jeff Currie, head of commodity research at Goldman Sachs, said that given the perfect macroeconomic environment and the extremely low inventory of almost all key raw materials, the outlook for commodities in 2023 was the best among all asset classes. The mild climate and rising interest rates have led to a decline in the beginning of this year. However, China's demand has begun to rebound and the supply side has not invested enough, which means that the whole year will be the “golden girl” moment of price rise. “For commodities, the combination of bullish reasons can't be more sufficient… whether it is inventory at a critical level or depleted capacity, the shortage of supply in each market is obvious.” Currie believes that this is similar to the record rise of commodity prices in 2007-2008. He said that the only exception is European natural gas, and this year's inventory seems to be sufficient. Goldman Sachs raised its aluminum price forecast on January 16, saying that rising demand in Europe and China might lead to supply shortages.
02
SOCIETE GENERALE
High interest rates may support the euro throughout the year.
Kit Juckes, chief global foreign exchange strategist of Faxing Bank, believes that unless there is new progress in the geopolitical situation, we should buy the euro on a bargain basis. If the Russian-Uzbekistan conflict had not affected inflation and economic growth, public finance and terms of trade in Europe, the euro should now show a clear upward trend against the dollar, approaching the level of 1.20. Of course, the direct impact of the conflict on the economy and the negative impact of the exposure of the European energy crisis on confidence are very important. However, if the impact of the conflict does not intensify or disappear completely, our interest rate forecast proves that the euro/dollar will have a four-digit increase this year, which is consistent with our forecast that the euro/dollar will rise to 1.12 at the end of the year.
03
MUFG
US CPI data needs to rise unexpectedly to support the US dollar and change market expectations.
Economists from Mitsubishi UFJ said that the US CPI data tonight is expected to further confirm that the inflation pressure is continuing to ease. It is expected that the monthly rate of overall inflation will fall by 0.1% and the monthly rate of core inflation will record a moderate growth of 0.3%.Before the release of the US CPI data, the market was inclined to believe that the Federal Reserve would further slow the pace of interest rate increase to 25 basis points at the next meeting, and the terminal interest rate would remain below 5%. Only if there is a sharp upward surprise in today's data can we materially change these expectations and prevent the dollar from further downward revision.
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