2020 Bad for oil and dollar ..Good for gold and stock markets

2020 Bad for oil and dollar : We are close to bid farewell to this year,
in which the most prominent event was the Corona Covid-19 pandemic which has weighed on many markets but supported others. 

Evest invites you to read the harvest of this ending year and know about the performance of different markets on the last trading day in 2020. 

 

Oil is ending the year lower

Crude oil prices fell today, in the last trading days of this year, ending it in a significant decline.

 

Brent crude fell by 0.12%, to trade at $ 51.57 a barrel,
while US West Texas Intermediate crude fell by the same percentage to trade at $ 48.34 a barrel.

With these numbers, oil completes its gains at a rate of 7.8% during December,
while it records a loss of about 20% of its value in 2020,
as Coronavirus Covid-19 affected oil demand and made it fall to record levels.

 

Oil witnessed one of the worst years as it lost abnormally especially at the height of the first wave of the virus,
but it reduced a good part of these losses during November and December,
as it received a support from the great optimism after developing 3 approved vaccines that proved effective in excess of 90% against the epidemic.

 

March witnessed the worst performance for oil this year, as it fell by almost half,
as it was trading at 23 and 21for Brent and US West Texas Intermediate respectively.

 

The world has seen closures, quarantines, suspension of foreign and domestic flights,
curfews and many more. This slowed down the demand for oil, making the supply much larger than required.

 

OPEC and its allies also failed to agree on changing the parameters of the production cut agreement.

Restrictions imposed on production for some countries within the organization were lifted on the first of April.

 

On the other hand, the weak dollar has also helped to support oil lately, as it recorded the lowest levels in more than 2 years.

This means making any dollar-denominated commodity attractive in the eyes of traders.

 

Gold is on the same pace

In the same approach, gold prices fell as optimism and hopes for an economic recovery in the world next year dominates the markets.

This made traders look to risky assets and drift away from the safe haven.

Gold fell by 0.2% to trade at $ 1889 an ounce.

 

With these numbers, gold trimmed some of its gains this year but it is still presenting its best performance in nearly a decade,
as it rose by more than 24% this year as it received a large subsidy from the stimulus and monetary easing operations undertaken by central banks around the world to reduce the effects of Corona Covid-19 virus which increased inflation and made investors resort to it as a safe haven.

Dollar played a role in these gains as its value declined but gold was pushed higher.

According to Reuters, the dollar is likely to complete its downward series at least, during the first quarter of next year.

This means that opportunities are ready for gold to complete its ascending march.

 

Any positive development in vaccines affects oil prices.

This happened on Wednesday, as the UK approved the vaccines developed by University of Oxford and AstraZeneca Company.

It is expected that vaccination operations will begin in the country through the start of next week.

 

The refusal of Mitch McConnell, the leader of the Republicans in the Senate to a quick vote on raising direct payments
to Americans offended by Coronavirus from $ 600 to 2.000, affected on gold,
as it seems that we have to wait for next year to decisively and categorically approve the stimulus package
which puts more pressure on dollar but more support to gold.

 

Dollar completes its chain of weakness

Today, the dollar has completed a series of its weakness through this year that is approaching its end,
but it diverged slightly from its 32-month lows.

Dollar index which measures the performance of the US currency against a basket of 6 major currencies, scored 89.60 points.

 

A group of currencies rose against the green currency, while another part fell.

Evest follows up the latest developments in foreign exchange rates against the US dollar.

 

The rise was attributed to the sterling which rose 0.08% to record $ 1.3631
while Australian dollar rose 0.24% recording $ 0.7702
but New Zealand dollar rose against its US counterpart by 0.29%
to reach $ 0.7222 and dollar fell against Japanese yen by 0.05% recording 103.13.

 

Dollar rose 0.25% against Chinese Yuan, recording 6.5396,
while the single currency fell against the US dollar to 1.2289 down at the rate of 0.06%.

 

Bitcoin rose to approach $ 30.000, as it increased its value up to $ 392.000 to record $ 29.98.000 at a rise of 1.37%.

 

Collective increase in US indices…and declines in Europe

 

Many countries are experiencing a holiday from trading as the German and Swiss stock exchanges are closed due to the
New Year’s Eve holiday, while France and UK will close early.

Therefore, European stock exchanges are expected to witness a great calm today with limited activities,
weak trading volumes and with a state of optimism about an economic recovery over next year in addition to the stimulus package which is still providing support to stock markets.

Yesterday, Stoxx 600 closed down by 0.34%, while British FTSE fell at 0.71%.

DAX fell 0.31%, French CAC alone fell 0.22%, but Swiss SMI rose 0.2%.

 

British market has declined significantly due to the country’s record of the largest number
of infections since the start of the epidemic.

At the same time, there is some optimism after Boris Jonson signed the trade agreement with European Union yesterday.

 

In the US, the three main indexes closed in the green area as the stimulus package remains the biggest supporter to the market.

Standard & Poor’s 500 Index ended trading 0.13% higher,
recording 3.732.04 points while Dow Jones Industrial Average rose 0.24% to trade at 30.409.56 points,
while Nasdaq rose 0.15% to trade at 12870 points.

In Asia, most markets are closed for New Year holidays.