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ZFX: Weak dollar may dominate the market in the new year opening
European stocks are expected to be mixed in the opening, following the uncertain trend set in Asian session on Monday and the current US stock futures. Despite the expectations of a weaker dollar, the market sentiment stays cautious in this moment.
Without any big news recently, most of the investors are still expecting a lower dollar, driven by the unprecedented fiscal and monetary policies by the US. It is expected that the dollar index may continually test its bottom, probably 89 or 88.5 in the first step, in the first quarter of 2021.
Analysts believe that the global economy will recover eventually from the coronavirus pandemic, that a bullish economic outlook would likely hurt the safe-haven dollar.
ZFX analyst Jacob Leung said that now the market is still thin during the holiday. The downtrend of the dollar may be even more clear after this week.
The spot gold price broke $1900 again in the opening, making an eight-week high since Nov 9. Besides reflecting the weak dollar, investors may be worried about surge in Covid-19 cases, sparking the demand of the safe-haven metal.
Bitcoin has made another record, breaking $30000 mark over the weekend, touching $34000 level. It has jumped over 300% in 2020, which is another crazy move since 2017. While many investors believe that such move is abnormal, may be the biggest market bubble so far, some of them still consider that bitcoin is a market chance.
ZFX analyst Jacob Leung said that, as mentioned before, weak dollar can typically push up the commodity prices, like bitcoin. Such a big trend of the bitcoin price is actually reflecting the distrust of those main central banks in the world.
Oil prices also rose on Monday, as traders now is expecting that the OPEC+ will maintain the production cut at current levels. ZFX analyst Jacob Leung said that, obviously it just “depends”. The OPEC+ will have meeting to discuss actions in February and if the oil prices are stable at the current level, we can’t simply expect the OPEC+ can reach another agreement for the production cut.