Close: London Session | Forex, Metals, Oil, Agriculture January 14, 2021

Agriculture

China trouble | The U.S. will bar entry of all cotton products and tomatoes from China s Xinjiang region, where it says Beijing is oppressing Muslim-minority Uighurs. Separately, it has banned cotton products and tomatoes that come from Xinjiang on human rights grounds. The US imported about $9 bln of cotton last year and $10 mln of tomatoes.

Currencies

FOREX: The dollar held above three-year lows versus major peers as expectations for President-elect Joe Biden’s fiscal stimulus pushed yields of U.S. government bonds higher. An increase in government debt triggered a move to stocks from bonds, pushing US Treasury yields higher and making the dollar more attractive. In global markets, gold prices were lower today amid higher US Treasury yields and a stronger dollar. Will it buy additional bonds, pushing yields and the dollar lower?
Bond yields and the dollar rose today after a report indicated that US President-elect Joe Biden plans a massive COVID-19 relief package of about US$ 2 trillion. less More government money is better for the dollar – at least when it comes to fiscal stimulus. If confirmed, it’s possible we will see a continuation of the prevailing trends of higher stocks and a lower US Dollar. Media reports that President-elect Joe Biden is set to announce a generous stimulus package worth has boosted markets and the dollar.
The dollar index was flat and gold prices edged lower. His colleagues at the Fed have been mostly rejecting the option of purchasing fewer bonds – but the focus on optimistic forecasts is supporting the dollar.

Metals

In 2002 when gold was $300 per ounce, MAM recommended to its investors to put 50% of their investment assets into physical gold stored outside the banking system. Barrick, which is scheduled to report fourth-quarter results on Feb. 18, said output from its Nevada gold mine fell 6.7%, while that from its Pueblo Viejo mine fell 11.2%. Moreover, global economic relapse from Covid or any other unforeseen risks could result in weak consumer demand, thus creating a headwind for gold’s performance.
Total preliminary gold production fell to 1.21 million ounces in the quarter ended Dec. 31 from 1.44 million ounces, a year earlier. Gold prices for the latest contract on MCX are trading down by 1% at Rs 48,813 per 10 grams. In domestic markets, gold prices fell sharply with MCX February futures slumping below the Rs 49,000 level. Gold prices are trading down 0.8% at Rs 48,905 per 10 grams. Gold prices are coming up on a key zone of support following recent losses.
“The most prevalent theme for investment conviction in bitcoin is coming from a rotation out of gold,” he said. BEFORE THE BELL Canada’s main stock index futures were little changed on weaker oil and gold prices.

Oil

For 2020, the world’s top oil buyer brought in a record 542.4 tonnes of crude oil, or 10.85 million barrels per day (bpd). Elsewhere, the report showed that US crude oil imports averaged 6.2 million barrels per day over the week, an uptick of just under 1 million barrels per day. Despite concerns of rising cases of COVID and mixed signals on Chinese oil imports, expectations for China’s oil demand is rising and is poised to move higher. Unless NOK appreciates more than the higher oil price suggests, a higher oil price tilts the rate path up.
Looking back across the last four weeks, US crude oil imports have averaged 5.6 million barrels per day. The slowdown came as it appeared that Chinese refiners had stockpiled enough crude oil at lower prices and will wait to see if prices dip before resuming patches. It was reported that China’s total crude oil imports rose 7.3% in 2020 with record arrival imports in the second and third quarters. On the other hand, activity dropped slightly less in November than expected, oil prices are some 10% higher and forward rates abroad have risen.
less The West Texas Intermediate crude oil market initially rallied during the trading session, but turned around to form a shooting star after the inventory numbers came out mixed.
This may also bode well for crude oil prices over the remaining 24 hours.

United States

US stock futures are trading higher today indicating a positive opening for Wall Street indices with Dow Futures trading up by 92 points (up 0.3%). Nasdaq Futures are trading down by 12 points (down 0.1%) while Dow Futures are trading up by 99 points (up 0.3%). Trump s trial will be the first to extend beyond a president s time in office, creating a novel legal question that ultimately could require Supreme Court resolution. Their backing, analysts say, has given Wall Street more confidence to invest.Institutions made up 87% of Grayscale’s inflows for the full year, the company said.
More importantly, the higher yields would naturally depress sky-high Nasdaq P/E ratios which are dependent not only on the companies growth prospects but but on ultra-low yields. But he also said he hasn t made up his mind whether to vote to convict Trump of inciting the riot that left five dead and damaged the Capitol. The Trump administration s outgoing competition chief says he expects tech scrutiny will continue when Joe Biden is president.
less The Nasdaq 100 (NDX, QQQ) initially pulled back during the trading session on Wednesday only to turn around and show signs of strength yet again. In other news, Parler, a social media outlet favored by some supporters of U.S. President Donald Trump, urged a court Wednesday to order Amazon.com to put it back online. This is much higher than what Senate Minority Leader Chuck Schumer is hoping for, who pushed for more than 1.3 trillion during Wednesday’s Wall Street trading session.

China

In the first week of January, Beijing recorded the coldest temperature since 1966 and other provinces hit their lowest mercury level on record. WSJ explains how Beijing is pouring money into high-tech chips as it wants to become self-sufficient.

Europe

Felixstowe, a key container port in the U.K. that s been roiled by Brexit backlogs, says current high volumes are expected to last well into the first quarter. The last few years have been significant for the cannabis industry in the EU and this is a trend that we expect to continue. On the one hand, the European Union lost one of its oldest allies and friends – not to mention a huge market and a powerful economy. We believe these markets are strategic in nature as they provide businesses with a launchpad into additional markets in the EU.
For example, businesses that used to export to the European Union now require their counterparty, the European client, to fill some extra forms for the export to be underway. Governments and supranational bodies such as the European Union and the African Development Bank issued almost all of 2020 s social bonds to fund pandemic healthcare and relief efforts. The ECB could then continue net asset purchases also beyond March 2022, but the focus will shift back to the APP.
less If there is one thing traders notice at the start of the new trading year, it is the lack of Brexit headlines. Further, the ECB’s strategy review will be an important exercise, which should be concluded during the second half of this year. Why would a customer from Europe do that, when it could simply turn back to the British company and import from a European Union competitor?

0