Fed Chairman is expected to speak today - 2.12.2020

On Tuesday, the US dollar index fell noticeably and updated its minimum since April 2018. The principal reason for this was the expectations of the Fed's emission in order to stimulate the American economy for a rapid recovery from the coronavirus pandemic. For the first time since the presidential election, US Treasury Secretary Steve Mnuchin and House Speaker Nancy Pelosi have negotiated these funds, discussing tentatively an amount from $900 billion to $1.4 trillion. Investors do not exclude that the Fed will make any statement on this matter at its December 16 meeting. The EURUSD rate exceeded the psychological level of 1.2 for the first time since April 2018. Besides the weakening dollar, this was facilitated by good economic data on Eurozone inflation and on the German labor market. The Fed Head Jerome Powell's speech and the publication of the economic survey "Beige Book" are expected today.

American stock indices rose on Tuesday. S&P 500 and Nasdaq updated their historic highs, gaining 11% in November. The Dow Jones rose 12% in November, the highest monthly gain since 1987. The main positive factor was the news about the creation of a Covid-19 vaccine and the expectation of financial aid from the Federal Reserve to US corporations and citizens. Futures on US stock indexes dropped this morning. Investors are awaiting Fed Chairman Jerome Powell's speech at the US Senate Banking Committee. They were a little disappointed with the news about the discussion on a bailout in the amount of $0.9-1.4 trillion, and not the $3.4 trillion that the Democrats previously offered. In addition, market participants are awaiting today's November Employment Change from the independent agency ADP. The report can help with forecasts of the official data on the labor market (Non-Farm Payrolls), which will be released on Friday. They can influence the Fed's decision on additional easing of monetary policy.

World oil prices stopped growing and have been traded in a narrow range for several days. Brent rose in price by 27% in November and is traded now around $47-48 per barrel. On November 30, OPEC+ did not make a decision on increasing production by 2 million barrels per day from January 2021. The discussion will continue tomorrow, Thursday. Saudi Arabia and Russia are proposing to increase production by 500 million barrels per day, but most of the cartel members do not want any increase, fearing a drop in oil prices. The API announced a 4.1 million barrels increase in US oil reserves over the week. Thus, they grew for the third week in a row. Copper quotes updated a 7-year high after US President Joe Biden announced that he would not terminate the Phase 1 trade agreement with China yet. China consumes about half of all copper mined in the world. Its quotes depend on the state of the Chinese economy.