Open: London Session | Forex, Metals, Oil, Agriculture August 14, 2020

Currencies

Finally, based on traders’ sentiment (derived from CFTC Commitments of Traders reports) the euro ranks as the second-most “overbought” currency among 12 global currencies. We’ll get an update on how much the euro area’s economy contracted in the second quarter; the initial report showed a 12.1% plunge. The number of “potential euro bears” is just too great to ignore. Historically, “expensive” exchange rate and a bearish divergence between the EURUSD and 10-2 yield spread enhance the views of a limited upside for EURGBP.
Gold dipped and the dollar was steady. Surely, it will take some time for it to play out, but it is definitely not helping the euro. Conversely, the British pound is currently one of the most “oversold” currencies. More importantly, we get euro-zone employment statistics, which could be misleadingly benign.

Metals

Gold 7 days Gold 14 days Gold 1 month Gold 1 month Gold 3 months Gold 6 months Norges Bank will keep the key rate on hold next week. On August 4, 2020, the price of gold surpassed $2,000 per ounce, currently trading around an all-time high of $2,050 per ounce. However, it is not only the rising gold price that indicates that the purchasing power of fiat currencies is on the decline. Even though officially demonetized in the early 1970s, people haven’t stop appreciating gold’s “moneyish” qualities.
Silver gained 6.56 per cent to $27.24.

Oil

With global demand expected to average 97.63 million barrels per day, translating to 29.29 million barrels per day from OPEC just to maintain balance. For the third quarter (the current quarter as I type this) this year, OPEC expects demand for its oil to average 26.74 million barrels per day. Others saw very small drops, like Iran with its 11 thousand barrel per day decline and Nigeria with its 9 thousand barrel per day drop. Putting all of its month-over-month changes together, output for July amongst OPEC nations averaged 23.172 million barrels per day.
Brent edged 0.18 per cent higher to $45.04 a barrel, but further gains may be limited by worries about weak global energy demand. Since the end of last year, if we use OPEC’s data as our base, commercial crude stocks in OECD nations are up 329 million barrels. During the month of July, all OPEC nations reported some change in oil production relative to the month before. Based on all of this data available, I must say that I’m impressed by the direction that the oil market is heading.
New data provided by OPEC shows output from the group rising, which itself is a negative, but this is not all bad. This would make sense, especially as crude inventories drop among OECD nations.

United States

Thanks to the new Fed credit facilities and the central bank’s decision to buy up corporate bonds, fixed income trading contributed the biggest increase to last year’s profits. The US economy was broken even without the pandemic lockdowns so there is no point in giving up your freedom or economic access to save the system. The US savings rate has spiked, therefore more Americans are saving, therefore they can financially handle another lockdown. The number was materially ahead of the $311.55 million expected on average by Wall Street analysts.
Nevertheless, both are exposed to headline risks with regard to US-China politics – the odds of being delisted from the US stock exchange, among others. Are Wall Street’s “star traders” really getting screwed here? Trump follows Jimmy Carter and Bill Clinton in getting an Arab nation to establish ties with Israel.

China

Shifting to a government-run digital payment system would help combat money laundering, gambling and terrorism financing, the PBOC has said. The PBOC has been doing research into a digital currency since 2014.

Europe

The EU’s recovery fund and the greenback’s dwindling yield appeal have been key drivers of that trend.

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