Open: London Session | Forex, Metals, Oil, Agriculture August 08, 2022

investors

Currencies

The reason the Dollar failed to rise against EM is that higher commodity prices boosted commodity exporters but weighed on commodity importers. In the first few months after Russia invaded Ukraine, the Dollar appreciated substantially against other advanced economies, but remained range-bound against emerging markets. To quote the institute: Most of the recent dynamics in flows can be attributed to the Dollar dynamics. Since Russia s invasion in February, they have been trading more in lockstep with the euro.

Metals

That s why its stopped buying Australian coal rather than iron ore.

United States

The implicit fed funds rate predicted for the Fed s meeting in February of next year started last week barely above 3.2%. Last week ended with non-farm payrolls for July showing that the US had added more than twice as many jobs as most economists had expected. The belief in an imminent pivot by the Fed away from raising rates has taken a knock. The US has grown more outspoken in voicing its defense of Taiwan as China s power has grown but how far will it go?
Nancy Pelosi, Xi Jinping and Thucydides Interest rates in the US add a prosaic but significant element to the scariest development of the moment, in the Taiwan Strait. The language that China and the US are using to describe each other grows ever less diplomatic. That changed in June as the Fed accelerated its hiking cycle. Would China and the US really make the same mistake?

China

Worse, from Beijing sperspective, it may not hurt Taiwan s producers too much right now: Many Taiwanese firms are still working their way through a backlog of orders. That, at least, would explain why Beijing is sanctioning Taiwanese fruit, rather than electronics.

Europe

That outlook is roiling the race to replace Boris Johnson as leader of the ruling Conservative Party and prime minister.

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