Close: London Session | Forex, Metals, Oil, Agriculture September 23, 2020



Sugar market ruled steady on Wednesday on routine demand, supply and volumes. The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,280 – 3,352 and M-grade 3,386 – 3,502.


Its proximity to Australia makes its currency, the New Zealand Dollar (NZD), moving in a tight correlation with the Australian dollar. The US dollar is holding just inside yesterday’s range against the Canadian dollar. This divergence between EU and US PMI data, which was first identified right after last month’s PMI data release, stands to fuel broader US Dollar strength. Mounting risk aversion could exacerbate the resurgence of US Dollar strength – particularly if a short squeeze ensues with Euro bulls unwinding their long EUR/USD positions.
A stronger dollar against major currencies overseas also put pressure on the domestic unit, forex dealers said. The portfolio is 72% high yield corporate bonds with another 18% in emerging market debt, two-thirds of which are denominated in the local currency rather than the US dollar. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed 0.18 per cent to 94.15.
The dollar was little changed against a basket of six major currencies. A stronger dollar makes gold more expensive for investors using rival currencies. less The prices of gold plunged to its lowest level in six weeks as the U.S. dollar reached its eight-week peak.


Central bank buyers have historically been sensitive to gold prices, reducing the amount of gold purchased or completely ceasing to buy gold in a sharply rising price environment. Across its portfolio, the company boasts a total reserve base of 550 million ounces of silver and 5.2 million ounces of gold. (source: Company IR) The story here was the increasing output from the company’s two main operating gold mines at the Pilar gold mine “Pilar” and the Turmalina project “Turmalina”.
For the rest of the year, Pan American has revised 2020 guidance down to 19-22 million ounces silver and 525,000-575,000 ounces gold. For the period between 2008 and 2019, the correlation between net purchases of gold by central banks and the price of gold stood at negative 0.56. The central bank of Russia, which has been a large consistent buyer of gold since August 2006, suspended indefinitely its gold purchases starting April 2020. This is even though the gold price and the Gold Miners Index are trading well above these key levels.
The Gold Analyst offers quality technical and fundamental analysis of the price of gold to help educate readers in their investment decisions. Source: Bloomberg This has weighed on precious metals with gold futures battered back below $1900… Gold has broken below its 50DMA… However, like gold, the long term uptrend in silver remains intact and the fundamentals that underpin silver are stronger than ever.


Overnight Libya’s Arabian Gulf Oil company reported that the Delta Hellas tanker is going to load 1.0 million barrels of oil for export today. Oil prices have chopped around overnight, rallying hard as Europe opened after weakness following last night’s surprise crude build reported by API. While demand outlook for crude oil remains fragile, the likeliness of selective lockdowns appears to have mitigated concerns in the industry somewhat. The unexpected drop in oil prices in March had a very negative effect on the company and the valuation of its assets.
The issue is that OXY will have a limited free cash flow in 2020, assuming oil prices between $39 and $46 per barrel. We also write daily and weekly reports, covering key variables in U.S. natural gas market (supply, demand, storage, prices and more). I would avoid shares of IPL because when you buy this company, the management team comes along with the excellent oil sands pipeline assets. Conversely, if oil prices turn bearish and drop below $40, OXY may drop below $8, but I do not see it likely now.
Oil demand recovery in Europe is expected to continue, but at a slower pace due to renewed localised lockdowns being imposed in some parts of the continent.
The debt is an unsettled matter for Occidental Petroleum, especially with lower oil prices that have reduced the asset’s values considerably.

United States

If the Fed were to purchase Treasuries without also buying MBS, Treasury rates could stay low while mortgage rates could come down much less, or even move higher. While it would be difficult for the Fed to ease financial conditions by lowering Treasury rates further, there remains substantial room within the agency MBS market to narrow spreads. Higher stock market prices are a must in the context of the new Fed’s mandate of Average Inflation Targeting (AIT).
The Trump administration’s approach has created significant volatility in markets, and there is fear that a second term would mean even more erratic and aggressive moves against China. See what you think… At the Fed’s open market committee (FOMC) meeting last week, they confirmed, among other things, that they will continue the latest pace of quantitative easing. The Fed and market participants have debated whether it should simply choose one tool or another and if the time to slow the pace of purchases has arrived.
We believe the Fed’s continued purchases remain a necessary and powerful tool to normalize this relationship and allow a seamless transmission mechanism of monetary policy to occur. President Trump also confirmed the U.S. would not impose a lockdown to curb the spread of the coronavirus after Boris Johnson walked back some eased restrictions in the U.K. The growth rates are depressed because only one segment of the business is growing, but Wall Street expects 20%+ growth through 2022.
The willingness of the Fed to let inflation overshoot the 2% automatically means higher stock prices.


TikTok trick talkChinese state-run media are denouncing the TikTok deal as “an American trap” and a “dirty and underhanded trick” as sentiment in Beijing swings against the proposal. President Xi Jinping s surprise announcement has left many questions.


“Escalating lockdown measures, fading stimulus measures and Brexit uncertainty will push the economy into contraction over the next two quarters,” said BofA’s Robert Wood, chief UK economist. UK Prime Minister Boris Johnson announced tighter pandemic containment measures for pubs, restaurants and bars for up to six months until a vaccine becomes available. As if Covid-19 hadn t sparked enough market gyrations, the next three months bring U.S. elections, tense UK-EU trade talks, and more.
i) The inability of EU member states to reconcile domestic policy agendas with real fiscal union hampers effective recovery at the regional level. Initial support programs are winding down and the U.K., with Europe s highest death toll, faces unquestionably difficult months to come, Prime Minister Boris Johnson warned. They will invite legislative measures to reduce strategic dependencies in sensitive industrial ecosystems such as health.Restrictions on public subsidies will be eased by updating the EU s state-aid rules.
The EU Recovery Fund ensures that some degree of fiscal support will persist next year.
ii) The ECB’s ineffectual and unreliable tinkering with increasingly ineffective monetary stimulus is doing little to address long-term growth and employment outside Germany. In the UK, Prime Minister Boris Johnson imposed a new set of curbs for six months to tackle the second wave of infections. Today’s statistics constitute a very worrying signal for policymakers, both governments and the ECB, and an incentive to do more to support economic conditions.