Close: London Session | Forex, Metals, Oil, Agriculture October 29, 2020

With uncertainty all about us, let’s sip our coffee calmly and take inventory.

As expected, the US dollar responded positively to the rise in VIX these last few days, which confirms our bullish view on the greenback in the near term. After sinking pulled lower by mostly the euro (which doesn’t matter, but that’s a separate story), suddenly the dollar, at least DXY, wasn’t feeding the flood myth any longer. In Asian trading, the dollar has experienced a pullback across the board, while the euro is consolidating within a narrow range.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.09 per cent to 93.49. A lot of this will have been based upon the US dollar strengthening, and that of course works against the value of precious metals over the short term. The dollar index was slightly up, while gold prices were little changed as caution crept in ahead of the U.S. elections. The company said total spending decreased 10% on a constant dollar basis, and the number of processed transactions tumbled 13% from a year earlier.
While gold appreciated against the dollar, the USD appreciated against other currencies. Even though we could see a weaker euro as the risk-off environment intensifies, we prefer to trade the single currency against other major crosses such as the pound. You can literally buy real estate at less than 50 cents on the dollar.

This translated to a 44% increase year over year, driven by a 4% increase in gold production and a sharp increase in the gold price. Somasundaram PR, Managing Director (India), World Gold Council said gold demand in December quarter last year was 194 tonne. He writes a daily letter, Ed Steer’s Gold and Silver Digest, and works closely with the Gold Anti-Trust Action Committee. The good news is that, despite a weak year from Canadian Malartic, most of the other operations have picked up the slack, leading to near-record gold production.
I see better value in Kirkland Lake Gold (NYSE:KL), which trades at less than 10x earnings at a share price of $44.20 and FY2021 annual EPS estimates of $4.42. Gold prices in the domestic market also fell for the second consecutive day today in tandem with a fall in global rates. In global markets, gold prices were flat today after a big fall in the previous session. Gold prices are trading down 0.1% at Rs 50,437 per 10 grams.
Gold prices are trading up by 0.1% at Rs 50,507 per 10 grams. Expected Q3 earnings of 21 cents per share Sandstorm Gold Ltd (SSL).

The oil and gas producer posted a quarterly loss in its third quarter, hammered by a steep decline in oil prices as pandemic-led travel restrictions crushed fuel demand. In line with plans to shrink its oil and gas portfolio, it said it would cut back its oil refineries from 14 sites to six “energy and chemical parks”. The Canadian oil and gas producer reported its third straight quarterly loss, hurt by a slump in crude prices and crash in fuel demand caused by the COVID-19 pandemic.
U.S. oil output reached around 13 million barrels per day in February before the coronavirus pandemic hit fuel demand. Reports of 50-foot waves created from Hurricane Zeta’s winds around the LOOP Louisiana Offshore Oil PORT is not the wave that has oil traders most concerned. Thanks to major technological advances, oil producers are now able to extract more oil from a given number of wells. Former Vice President Biden’s talk of moving America away from the oil industry is another reason to question long-term American oil holdings.
The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.3 million barrels from the last week.
Whether this results in a deal or not, I believe ultimately China will get the oil, and that means CNOOC will get the oil. Cenovus said total quarterly production rose 5.2% to 471,799 barrels of oil equivalent per day (boepd).

BEFORE THE BELL Wall Street futures were higher ahead of the U.S. third quarter GDP data and results from top technology companies later in the day. Wall Street futures were higher ahead of the U.S. third quarter GDP data and results from top technology companies later in the day. In the US, the economic outlook is also clouded because prospects for a new fiscal stimulus package has been delayed, perhaps until next year. Our worry is that the US economy, the one most of us do most of our investing in, is going to stutter like the eurozone one is.
Looking at Merck’s (NYSE:MRK) response to strong earnings yesterday (big beat and raise) might be telling us President Trump’s prospects are better than suspected. “Going forward a clear outcome from the US election, clarity on stimulus package from the US, and the Indian government will guide the INR,” Bhatt said. Trump must have offered Flynn a full exoneration many times, but every one of his refusals of the offers must have been more stern than the last one.
Fiverr’s revenue grew at a spectacular 88% y/y rate to $52.3 million, smashing Wall Street’s expectations of $48.8 million (+75% y/y) and even over Q2’s 82% y/y growth pace. US stock futures are trading higher today, indicating a positive opening for Wall Street indices. US stock futures are trading higher today indicating a positive opening for Wall Street indices.

The outbreak in Kashgar, part of the northwestern Xinjiang region, where China’s mass-detention program for million of ethnic Ughyer Muslims has been carried out.

The ECB sent strong signals that another easing package would be in store in December, as the economic outlook had darkened notably. This week, EU and UK negotiators have made progress in resolving some of the major differences in the Brexit talks, reviving hopes for a deal by early November. They still foresee a higher tiering multiplier, but expect the ECB to wait until more of the PEPP has been implemented (or a rate cut does materialise). We expect that key growth drivers will come from Europe, as the continent starts implementing EU recovery funds in Q4, while China continues its strong recovery.
ET, followed by a press conference with President Christine Lagarde that will present new staff forecasts, as well as the latest commentary on inflation. However, they think EUR/USD would still need to be closer to 1.20 before the ECB sees it as restrictively strong and acts in that regard. This pandemic is a medical, economic, social, political and psychological test, Merkel said on Thursday.
In fact, the market reaction was slightly dovish, even if no huge market moves were seen in response to the ECB. The pound has managed to weather the storm and claw onto 1.30 in response to reports that the UK and the EU have made progress on state aid. Next door in the U.K., Prime Minister Boris Johnson is under pressure to introduce another national lockdown.