Close: London Session | Forex, Metals, Oil, Agriculture August 10, 2021

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Agriculture

According to Bloomberg, preliminary reports show the South American country may lose millions of bags of arabica coffee. That was nearly double the nominal wheat price peak of $6.32 per bushel in February 1974. Learn more about Orbex at www.orbex.com/en less A wicked cold snap and massive drought in July have devastated Brazil’s coffee belt. The nominal price of wheat peaked at $12.00 per bushel in March 2008. A formal damage report of Brazil’s coffee belt is due in the coming weeks.
It’s only a matter of time before coffee inflation, sparked by volatile weather, is passed on to U.S. consumers.

Currencies

Consumer prices are due for release on Wednesday and a good number would reinforce expectations for taper in the fall, driving the dollar higher. The strength of the dollar following the release of Friday’s NFP caused gold prices to plummet Monday. The DXY US Dollar index climbed to a two-week high, rendering bullion less appealing to investors who are holding foreign currencies. Further releases from China’s metal reserves, coupled with US Dollar strength, may exacerbate the recent bearish sentiment surrounding copper.
The blend of higher yields and soaring DXY, and the better-than-expected jobs figure pushed the US dollar towards 93 levels. Dollar-denominated precious metals prices remained negatively impacted by the higher dollar value. Nevertheless, another uptrend seems unlikely as the US dollar continues to be pushed towards Treasury yields by the Fed’s lower expectations. Trading directly between the dollar and digital currencies often involves high transaction costs and delays in processing.
Dollar Daily Today’s price movement is forming a doji, a candle demonstrating indecision, as the greenback hovers at its highest level since Apr. Demand for the US dollar rose on Friday (August 6) after the release of solid labor market data for July.

Metals

This augurs well for Indian steel user industries, which have been affected by the surge in ore prices since November last year. An inverse relationship between interest rates and gold prices is implied by higher rates. Furthermore, the better than anticipated NFP data released last week also placed a bearish impact on gold. The positive economic release from the US placed another bearish pressure on the precious metal gold, driving its price down to the $1,725 level.
10-year Treasury yields surged to above 1.30%, exerting downward pressure on gold and silver because when rates move higher, the opportunity cost of holding the non-interest-bearing metals rises. The Chinese Iron and Steel Association has projected a slower growth in steel production during the current half compared with the first half this year. A rollback in the stimulus along with the eventual rate hike could weigh heavily on gold prices in the short term. A further indication of Chinese steel production declining is data showing that iron ore imports into China from Australia slipped for the fourth consecutive month in June.
Gold prices for the latest contract on MCX are trading on a flat note today at Rs 45,920 per 10 grams. The hawkish sentiment such as Fed might start reducing monetary support of $120 billion worth of monthly asset purchases sooner than expected is keeping gold bearish.

Oil

Nifty Auto was down 0.78 per cent and Nifty Oil&Gas was down 0.53 per cent.The volatility index rose 0.79 per cent to 12.71. Metals, realty and PSU Bank stocks saw steep losses while auto, oil and gas, and FMCG too remained under pressure.Nifty IT was up 0.87 per cent at closing. Nifty Oil & Gas was up 0.30 per cent.Meanwhile, Nifty Metal was down 0.53 per cent. Its current price of $66 per barrel is cheaper than its inflation-adjusted peak 1980 peak of $132 per barrel by fifty percent.
Oil Daily While the price of crude climbed back above the 100 DMA, yesterday’s low registered a second trough, completing a downtrend.
New restrictions put pressure on the oil market and currencies underpinned by Asian trade relations. Demand for oil products might be boosted by a possible passage of the often mentioned $1 trillion infrastructure bill. Oil rebounded, nearing $68 a barrel, nearly wiping out yesterday’s extended selloff. The battery business is poised to grow in the 21st century as oil did in the 20th: fast and geopolitical. Crude oil is considerably less expensive.

United States

Furthermore, according to Democratic Senator Joe Machin, if the Fed continues to maintain its current interest rate policy, it could fuel higher inflation and financial instability. The S&P 500 closed at 4,432, down 4 pts, the Dow Jones closed at 35,102, down 106 pts, while the Nasdaq Composite closed at 14,860, up 24 pts. Bullion traders liquidated their positions quickly amid fears that the Fed may scale back monthly bond purchases sooner than markets had anticipated.
Currently S&P futures are down 1 pt, Dow futures are down 20 pts and Nasdaq futures are up 12 pts. Though after the surprise in NFP last Friday, many analysts are weighing the potential of the Fed starting the taper earlier than expected. Looking ahead, traders are eyeing Wednesday’s US headline and core inflation data for clues about rising price levels and their ramifications for Fed policy. The CRB index itself fell 1.3% yesterday, down for the sixth time in the past seven sessions.US equities struggled yesterday, with only the NASDAQ closing higher.
The rate is still quite high, but the Fed projects rates will return to normal by the end of the year. less Michael Lebowitz commented on San Francisco Fed President Mary Daly’s comment “High inflation numbers, in my opinion, do not indicate that the Fed should reverse direction.” The infrastructure bill is rather factored into the expectations, and similarly to the Fed taper looming, any surprise could serve as a selling catalyst.

Europe

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