Summary of institutional views: Saudi political situation shocked the market, the Reserve Bank of Australia resolution is coming

On Tuesday (November 7), the Asian market in early trading, Saudi anti-corruption actions intensified the situation in the Middle East, and the contraction of crude oil supply was expected to be boosted, and oil prices soared. At the same time, risk aversion was awakened, causing the price of gold to rise. The US tax reform will be revised this week in the House of Representatives, and the differences between the parties remain, causing a surge in uncertainty. In addition, the Reserve Bank of Australia will announce the interest rate resolution on Tuesday.

Foreign exchange

Dollar index

Reuters: Focus on US vacancy data for JOLTs in September, which will hint at US labor demand.

At 23:00 Beijing time on November 7th, the results of the US Department of Labor vacancies and labor mobility survey (JOLTS) will be announced. It is expected to show whether there is support for labor demand or whether it needs to be boosted.

The current ratio of job vacancies to resignation in the United States is close to 2:1, which is close to the historical high of 2.12 set in July 2015. Prior to this, the United States has released strong GDP data, and the Republican Party in the US House of Representatives announced the tax reform plan on Thursday, which they believe will help lift the economy.

Deutsche Bank: The Trump tax plan will boost economic growth by 0.6% over the next 10 years.

Credit Suisse: US stock valuation will rise.

BlackRock strategist Turnill: The dollar is expected to be slightly stronger as the Fed will take the lead in normalizing policies compared to other developed economies, and the US economy will show upward potential. Although the US dollar rose in October, commodity prices rebounded during the same period, and emerging market stocks were better than developed countries. Due to differences between the central banks' monetary policies, the US dollar is bullish against the yen and the euro.

Barclays: The size of the US Treasury bill will increase by $425 billion by March next year.

Barclays strategist Joseph Abate said in a November 3 report if the US Treasury’s data on debt and the “political judgment” of suspending the debt ceiling. If it is correct, then the market size of the short-term Treasury bill will increase by $425 billion from the beginning of November to the end of March next year.

This will push the proportion of Treasury bills in the overall circulation of foreign debt from the current 13% to about 16%, the highest level since 2012. The US Treasury Department expects that Congress will attach a resolution to suspend the debt ceiling to the updated continuation resolution before or after December 8.

Bank of America Merrill Lynch: Tax reforms may hit the weakest US high-yield bond issuers.

According to a report by the Bank of America Merrill Lynch Global Research on November 3, the proposed tax reform program is generally beneficial to bond issuers, but some poor quality borrowers may suffer losses. If this is the ultimate law, American companies will benefit a lot, and high-yield issuers will also be exposed. The impact on low-quality companies is even more pronounced.

Australian dollar

Reuters survey: The Reserve Bank of Australia's November policy meeting is expected to maintain the overnight call rate at a record low of 1.5%. Of the 48 analysts surveyed by Reuters, 47 expect the Reserve Bank of Australia to remain inactive at the policy meeting on November 7.

The Reserve Bank of Australia relaxed its policy twice last year, but then kept interest rates unchanged.

Most analysts expect the Reserve Bank of Australia to keep interest rates unchanged until the middle of next year, but 31 of the 44 respondents expect the central bank's policy to tighten until December next year, and one believes the central bank will relax the policy.

GBP to USD

Barclays: This week the pound is facing two-way risk.

Barclays believes that after last week's plunge, the pound faced two-way risk this week. On the one hand, the turbulent political situation in the UK will increase the downside risk of the exchange rate. On the other hand, the market seems to ignore the part of the Bank of England's rate hike statement last week. The hawkish signal, if it is partially re-priced for short-term interest rates in the next few weeks, will not be surprised or support the pound.

Institutions: Moderately bullish on the pound, looking at 1.35 a month.

ING said that it is moderately bullish on the pound against the dollar near the current level, and this week is expected to trade at 1.30-1.33, with a target of 1.35 near the target for one month.

Huitong Finance and Economics Huihui market software shows that Beijing time 09:04, the US dollar index reported 94.71; the euro against the US dollar reported 1.1615/17; the pound against the US dollar reported 1.3173/75; the US dollar against the yen reported 113.75/77; the Australian dollar against the US dollar reported 0.7693/ 95.

Euro against the dollar

Agency: It is advisable to short the euro and increase the short position when it rises to 1.17.18.18.

The Nordic Bank pointed out that the bearish EUR/USD should remain short at the end of the year, due to the end-of-year effect and the scarcity of the US dollar. If the exchange rate rises to 1.17-1.18, it is recommended to increase the short position.

EUR/JPY

Societe Generale: The euro is below the bottom of the 1.1460-1.1880 range. Societe Generale said that there is no news of the positive euro, although the trading range of 1.1460-1.1880 is still intact, but the risk is biased towards the bottom of the downward range; since the exchange rate is above 130, the euro is bullish against the yen in the medium term.

crude

Brown Brothers Harriman: NYMEX crude oil may rise to $60/barrel.

Brown Brothers Harriman pointed out that NYMEX crude oil futures both closed sharply in the past two weeks. It has risen in eight weeks in the past nine weeks and once rose to the highest point in July 2015 at around $55.75 per barrel, mainly due to the United States. The number of stocks and rigs has decreased, and there are indications that OPEC and Russia are expected to extend the production reduction agreement again from nine months to the end of 2018; the technical indicators are at an extreme value, and the NYMEX December crude oil futures price closes above the Bollinger Band, although the stocks are rising. $60/barrel is possible, but it is expected to be adjusted first, with initial support at $53.90/barrel.

Goldman Sachs: The crude oil market continues to rebalance and there may be a supply gap.

Goldman Sachs analysts said it still believes that the crude oil market is heading towards rebalancing, while maintaining the WTI price outlook of $20-2019 for $25 a barrel. The demand for this year is expected to increase by 1.6 million barrels. It will once again be strong again next year. The daily demand will increase by 1.5 million barrels. It is estimated that the daily output of OPEC crude oil will increase from the current 32.8 million barrels to 33.2 million barrels in 2018.

If OPEC and Russia extend the production reduction plan, and other things remain unchanged, the inventory is expected to fall below the 2011-2015 average, and the market is further entering a shortage. Affected by the production of Canada, Brazil and Kazakhstan, it is still expected that non-OPEC crude oil production outside the US will increase in 2019. It is expected that US crude oil production will grow strongly between 2018 and 2020, with an increase of 800,000-900,000 barrels.

Bank of America Merrill Lynch: Brent crude oil may reach a peak of $75/barrel, and WTI crude oil may reach $65/barrel. The price of WTI crude oil in December 2020 is still anchored in the range of 48-52 US dollars / barrel.

US energy intelligence agency Genscape: US Cushing crude oil inventories increased by 827,000 barrels compared with last week.

Consultant S&;P Global Platts: The darkest period of the crude oil market has passed, but there is no comprehensive revival.

S&;P Global Platts said that the crude oil market has already passed the most difficult time, the price of oil has risen sharply, and the collective reduction of production initiated by OPEC has been indispensable.

The agency said that OPEC's largest crude oil exporter Saudi Arabia tried to persuade other oil-producing countries, so that the current reduction in production has been quite close to the total target set by the collective reduction operation - 1.8 million barrels / day, most suppliers Already profitable. However, it must be noted that the increase in US shale oil production is still a potential threat to supply oversupply, and the oil market is not yet fully revived.

According to data provided by Platts, the US crude oil exports reached 2.1 million barrels per day in October this year.

Platts also expects US crude oil exports to be expected to grow further. The current average production cost of US shale oil has been reduced to $30-35/barrel. According to Jenna Delaney, an analyst at the agency, shale oil in the US Permian basin will continue to flock to the international market in large quantities.

UBS: This year's improvement in US investment is almost entirely reflected in the shale oil sector.