Market Watch. OPEC+ meeting postponed
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Market Watch review. 02.12.2020

In today's release, we’ll cover the following topics:

  • OPEC meeting postponed to December 3.
  • VIX index decline to pre-crisis levels.
  • Jerome Powell and Stephen Mnuchin speak to Congress. 

The OPEC+ countries postponed the meeting to December 3, which was scheduled for December 1. This is stated in a letter sent to the delegates of the participating countries. 
The meeting will be held in a video conference format. According to the source, the time before it will be used for informal consultations.

Earlier it became known that the negotiations of the participants of the OPEC+ deal to limit oil production have not yet led to a result. Saudi Arabia wants to maintain the current limits of 7.7 million barrels per day for three or four months. The United Arab Emirates has been pushing for a gradual increase in production since January. A similar position is supported by Norway and Kazakhstan.

The fear indicator VIX is naturally moving into the area of historical average values in the region of 20 points. As we can see, optimism returns to investors due to good data on production and international trade, as well as progress in the development of a vaccine.

The decline in the fear index led to a wave of optimism. So, yesterday the dollar continued to seriously weaken, broke through its support line and went into free fall. Although not sheer. Similar movements occur in other currency pairs: USD/CAD, GBP/USD. The Israeli shekel, the Chinese yuan, the Indian rupee, and other currencies, including those of developing countries, have also strengthened very strongly. 

At the beginning of December, the reduced volatility index gave rise to a global RISK ON, which is expressed primarily in the weakening of the US dollar. Money is taken out of the dollar, as from a safe haven, and sent to a variety of markets, including commodity markets, which also show significant growth. Both gold (+2%) and silver (+6%) quotes flew up. 
During his speech at the last hearing in the US Congress Jerome Powell suggested that due to the COVID-19 pandemic both in the United States and abroad, the next few months will remain problematic for the economy, despite the progress in vaccine development. 

According to Powell, emergency programs introduced by the Federal Reserve in the spring of this year to support credit markets in the face of a pandemic, opened up business, city and state authorities access to resources worth almost $2 trillion. He believes it is important to keep these programs, not cancel them.

So, on November 30, the Fed extended the duration of four loan programs until the end of March 2021 that helped stabilize the short-term financing market at the peak of the pandemic. 
Mnuchin agreed with Jerome in favor of extending the four programs. Mnuchin also attended a Senate Banking Committee hearing on Tuesday. The text of Mnuchin's statement prepared for the hearing says that $455 billion not used by the Federal Reserve can be directed by Congress to a new package of measures to support the economy.

Closely monitor the news background and be prepared for all the surprises of the market.
 

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