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Dollar weaker on slowing inflation expectations

Risk appetite improved in the early part of the session on Monday following a NY Fed survey showing that expectations for inflation were coming down.

Key factors for today:

• US inflation expectations come in lower than expected


• Gold a tad higher on long-term yields


• Energies end session higher due to colder weather


• 9th round of sanctions still in the works


• China makes further steps in relaxing covid restrictions


• Northern Ireland Bill at risk

Shiny metal a tad higher

Gold rose 0.27% after Treasury’s auction of 10-year notes showed the lowest demand since 2009, suggesting inventors were unwilling to put their money into long-term commitments. Meanwhile, participants await an intense macro week with most major central banks holding rate decisions.

Oil and NatGas up on colder weather

A cold spell affecting most of Europe and North America is seen as supporting oil prices. WTI ended the session 1.33% higher with $76.30/bbl crucial resistance. A major winter storm is expected to affect most of the central US throughout the week.

Von der Layen said Europe might still face a gas shortage in 2023, but the energy supply for the winter was safe. She said she hoped a price cap on n gas would be agreed on this week. Natural gas prices missed the $7.00/cf mark for a few cents before pulling back to $6.40/cf, but still saw an uptick of 2.40%.

More sanctions on

EU Foreign Policy Chief Borrell said that discussions on a new (9th) round of sanctions on  hadn’t finished yet, but expects results by the end of the week. Measures include sanctions on banks and export controls on dual-use goods, including electronics and IT components.

Further covid easing in China

Hong Kong lifted the requirement to use its covid app and restrictions for international arrivals. Quarantine-free travel between China and Hong Kong is expected to restart in January. New Yuan Loans came in below expectations, weighing on some commodities as investors worry that the reopening isn’t supporting as much demand as expected. The Hang Seng index rose 0.63%.

Northern Ireland Bill back in the news

It was initially reported that PM Rishi Sunak had delayed the Northern Ireland Protocol Bill for goods between Britain and Northern Ireland to strike a deal with the EU. UK's Foreign Minister James Cleverly said he wanted a settlement as soon as possible. Then a spokesperson for the Prime Minister denied that the protocol bill had been delayed.

On the docket

• German CPI and Harmonised inflation


• UK jobs and average earnings


• US CPI inflation


• API crude oil stocks


• OPEC monthly report

FX daily performance in USD terms

• Aussie best performer as it closes 0.29% higher against dollar


• Kiwi rises 0.16% vs greenback


• Pound and euro 0.13% and 0.10% higher, mainly mixed

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