Weekly Market Update 5 Feb 2021 – USD Rally on Macroeconomic Data, Silver Short Squeeze
Weekly Market Update 5 Feb 2021 – USD Rally on Macroeconomic Data, Silver Short Squeeze
1. The USD picked up bullish momentum as macroeconomic data has been improving. Jobless claims data and ISM manufacturing and services data both beat expectations, although some previous gains were returned with the release of the non-farm payrolls figure, which came in weaker than expected.
2. Silver became the new target of short-squeeze in the market by retail traders banding together on social networking platforms, with prices reaching an 8-year high at the beginning of the week, prompting the CME group to raise margins on silver futures trading. Both gold and silver gains fizzled out at the end of the week on the back of the dollar’s rally and a surge in global government bond yields.
3. The BOE voted unanimously to leave monetary policy unchanged and told banks to start preparing for negative interest rates, though stressing that the move may not be necessary. There was an overall optimism on growth, as GDP is projected to recover to pre-Covid levels in 2021 on the back of the nationwide vaccination programme, although the 2021 GDP forecast was lowered due to the lockdown in Q1.
