Share:

Investors in Europe remain in a cautious mood on Tuesday as they await a huge influx of economic data in the coming days, while US futures are also pointing to modest gains ahead of the open.

Stocks in China soared after a difficult start to the week, on the hope that the country's zero-Covid policy stance may be relaxed further. That had been the expectation in recent weeks, with a modest softening recently seen being followed by a more substantial shift in the spring.

But protests in recent days on the back of record Covid cases and tighter restrictions could have gone either way and that made investors extremely anxious on Monday. While I can imagine the path from zero-Covid to zero restrictions will be long and full of potholes and hurdles, the response to the unrest has appeared more promising than feared.

It may well be that the leadership had already been gauging the public mood on restrictions and had, as has been rumoured, already been planning its exit strategy which recent comments align with. Either way, it appears zero-Covid has reached a crossroads and the direction of travel now will determine investor appetite toward Chinese stocks going into 2023. Today's rebound suggests there's some optimism.

So much uncertainty in the oil markets

It's already been a very volatile week in oil markets and that's unlikely to change over the coming days given the immense uncertainty over the Russian price cap, China's Covid stance, and the OPEC+ meeting. The market is being led by speculation and leaks, of which there have been plenty and will likely be much more, which makes for very lively conditions given the wide array of possible outcomes.

And as you'd expect, all of the above are linked to varying degrees. A record surge in Covid cases is leading to tightening restrictions weighing on activity, spurring protests, and forcing a rethink of the country's zero-Covid policy. They've also weighed heavily on prices with China being the world's second-largest economy which will impact the demand forecasts from OPEC+ unless the group opts to hold on and await more clear signals and data.

Also influencing the group's analysis will be Russian sanctions, most notably the price cap which is yet to be fully agreed upon. The latest rumours suggest the cap could be agreed to as low as $62 which is much lower than the $65-70 previously leaked and could therefore have a bigger impact on Russian output. And of course, Russia itself is a key member of the OPEC+ alliance, just to complicate matters further and could throw its weight around in those discussions and make an agreement harder and more uncertain.

Oh and the EU does have a tendency to make full use of deadlines, with the next sanctions due to come into force the day after OPEC+ meets, which is of course on a Sunday for some reason. Not that the alliance always comes to quick agreements and on this occasion, you could easily forgive them for not. Needless to say, this is certainly a recipe for volatile trading conditions.

Volatile and awaiting key US data

Gold is rallying again on Tuesday on the back of a softer dollar but has only largely wiped out Monday's losses leaving it basically net even on the week. I expect to see plenty more volatility in the coming days given the amount of US economic data that are being released including inflation, GDP, and the jobs report. That sets us up nicely as we move into the final month of the year with only a couple of weeks to go until the hotly anticipated CPI inflation report and Fed meeting.

Choppy and vulnerable

Bitcoin has also reversed its Monday losses, rallying 1.5% so far today. The cryptocurrency has remained volatile in the aftermath of another plunge following the FTX collapse and now trades more than 75% from its highs just over a year ago. Even now it remains vulnerable as we continue to discover what the full contagion effect will be and what else will be uncovered.

Share: Feed news

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD holds above 1.0700, eyes on Powell

EUR/USD edged lower toward 1.0700 in the early European session but managed to hold above that level. As investors await speeches from ECB officials and FOMC Chairman Jerome Powell, the pair struggles to make a decisive move in either direction.

EUR/USD News

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD falls to fresh monthly low below 1.2000

GBP/USD came under renewed bearish pressure and touched its lowest level in a month below 1.2000 on Tuesday. Despite the modest improvement witnessed in risk mood, the US Dollar holds its ground and weighs on the pair as focus shifts to FOMC Chairman Powell's speech.

GBP/USD News

Gold retreats below $1,870 as US yields rebound

Gold retreats below $1,870 as US yields rebound

Gold price erased its daily recovery gains and turned flat slightly below $1,870 heading into the American session. Following a downward correction earlier in the day, the benchmark 10-year US Treasury bond yield staged a rebound and caused XAU/USD to turn south ahead of FOMC Chairman Powell's speech.

Gold News

Will Bitcoin price test $20,000 again?

Will Bitcoin price test $20,000 again?

Bitcoin price shows clear signs of distribution occurring on the four-hour chart, which indicates the possibility of a trend reversal. Moreover, BTC has been consolidating for more than two weeks with no direction in sight.

Read more

Central banks, markets and the economy: Three times wrongfooted

Central banks, markets and the economy: Three times wrongfooted

In the US, financial conditions have eased in recent months and weighed on the effectiveness of the Fed’s policy tightening. Jerome Powell recently gave the impression of not being too concerned, so markets rallied.

Read more

Majors

Cryptocurrencies

Signatures