Close: London Session | Forex, Metals, Oil, Agriculture June 09, 2021

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Agriculture

To be sure, Brazil is the world’s largest producer and exporter of sugar and the country’s propensity for ethanol production drives the sugar market. Surplus productionHowever, going forward, the world sugar market is likely to be burdened with surplus and the size of surplus is sure to weigh on prices. No wonder, India has sought to reduce the inventory burden through export of 5-6 million tonnes of sugar with an element of subsidy. As Covid-19 related restrictions are gradually lifted and economic activities normalize in developed and developing economies, sugar consumption is expected to surge.
The one support factor for sugar would be crude oil. Over two decades ago Jay got his start at the Kansas City Board of Trade in the Wheat Futures pit.

Currencies

Investing.com Follow Falling yields dragged the dollar lower ahead of tomorrow’s US inflation report, a possible leading indicator on the path of interest rates. less Gold prices traded modestly higher after falling -0.37% a day ago, as weakening Treasury yields and a cheaper US Dollar boosted the appeal of the non-interest-bearing metal. They emphasized the resurgence of COVID-19 infections in many countries, the weak U.S. dollar, and the declining U.S. government bond yields.
Gold is unable to benefit from the weaker dollar and lower interest rates. Both the U.S. dollar and Treasury yields have not recovered, which boosts the demand for the bullion. While it has been strengthening in recent days, the prospect of the US dollar appreciating in the months ahead will put pressure on the rupee. It also states that the U.S dollar will be used as the reference currency for accounting purposes. The pound sterling is the oldest currency of all, having turned 327 in 2021, followed by the dollar, which is 229 years old.
If the dollar rises, the rupee will depreciate like many emerging market currencies. Both events have a direct influence on the Canadian dollar pairs, so that is where the price action matters.

Metals

As the world’s third-largest gold importer, Chinese buyers may provide medium-term support to gold prices. For instance, when gold invalidated its breakout above 2011 high despite very bullish fundamentals, it meant that forecasting gold at lower levels was very much justified. No market can move up or down in a straight line, and neither copper nor gold nor silver are exceptions to this rule. During those times, if you’re doggedly precious metals focused you should consider silver, which, as a hybrid precious metal/industrial commodity, has more pro-cyclical inflation utility than gold.
less Copper is often overlooked when looking for gold price movement clues. less Gold prices barely changed on Wednesday as investors wait for the release of the U.S. consumer price index (CPI) report. >> Fabrice Drouin Ristori on Twitter is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system.
Source: Bloomberg, DailyFX Rising price pressures may continue to support gold, which is widely perceived as a store of value and hedge against inflation. More precisely, strong demand for copper translates into higher prices and thus an indication that the global economy is expanding. Gold prices for the latest contract on MCX are trading down by 0.1% at Rs 49,073 per 10 grams.

Oil

So the oil market that expressed optimism that Iran’s oil would hit as demand ramps up this summer might now be faced with a looming shortage. US gasoline stocks were up by 1.5 million bbl in the week ending May 28 to 233.9 million bbl, the EIA said. Oil (OIL,BNO) and other industrial commodities are firmer, and the CRB Index closed yesterday at new six-year highs. Sectoral indices ended on a negative note with stocks in the energy sector, oil & gas sector, and realty sector witnessing most of the selling pressure.
It would also regulate the oil industry and attract more investment to the sector, according to lawmakers.
While the heat is on the oil giants, though, their market share won’t exactly be easy pickings for other producers. That could mean additional Iranian oil supply would not be re-introduced into the market soon. Biden s Climate Chief Plans Oil-CEO Talk on Carbon Crackdown Chief executives of some of the largest U.S. oil companies are set to meet with Gina McCarthy. Libya holds Africa’s largest crude reserves, but it’s struggled to pump a fraction of the oil it produced under late dictator Moammar Qaddafi.
“The NOC is facing tremendous challenges in the rehabilitation and restoration of oil installations,” Sanalla said.

United States

“The market is pricing in a 40% chance of inflation exceeding 3% over the next 5 years,” UBS said in its report. Source: Bloomberg, DailyFX Looking ahead, traders are eyeing Thursday’s US inflation data for clues about rising price levels in the US and their ramifications for Fed monetary policy. Fed members are not as open about their desire for higher asset prices as general price inflation. Given the indirect market liquidity resulting from the Fed’s stimulus, a reduction is likely a headwind for many asset prices.
Many of those bonds also included fine-print warnings that the companies might not fulfill their environmental pledges, according to documents reviewed by The Wall Street Journal. Futures on the Dow, S&P, NASDAQ and Russell 2000 wavered in pre-US open trading on Wednesday as markets tread water ahead of the key economic indicator. Speaking of inflation, We all know that commodities are much higher and that homes are priced ridiculously high across most of the US.
less of this article showed how growing wealth inequality might pressure the Fed to taper QE and/or raise interest rates. Based on many Fed statements, financial conditions are stable when equity prices are rising and unstable when falling. The Fed wants to boost economic growth with rising asset prices.

China

Beijing is trying to finesse lower producer prices by cracking down on unauthorized activity, but it does not appear sufficient.

Europe

“During the Covid-19 pandemic over 30 billion euros in discriminatory state subsidies has been gifted to EU flag carriers,” Ryanair said in a statement. Ryanair has filed more than two dozen challenges to EU approvals for pandemic aid doled out by governments to carriers, including Deutsche Lufthansa AG and Air France-KLM. Credit Suisse economists expect the ECB to cut monthly bond purchases under the Pandemic Emergency Purchase Program to €60 billion. Higher bond yields in anticipation of the ECB cutting its bond-buying program would defeat the purpose of the bond-buying program.
The EU needs unanimity among its member states on most tax matters, so dissent within the bloc may complicate an international agreement.U.K. U.S. Gets EU Support for New Covid Origin Study A draft statement says phase 2 study should be free from interference. The transformation has raised concerns of “greenwashing,’’ or mislabeling funds or securities as green, and the European Union in March enacted new regulations to curb the practice.
Speculation that the ECB will prolong emergency asset purchases have emboldened investors to boost exposure to Europe’s riskier sovereign periphery in the past month-and-a-half.
President Joe Biden will hold talks with Johnson and EU leaders on the dispute on the sidelines of this weekend s G-7 summit in southwest England. less The economic situation in Europe has improved since the last ECB meeting.

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