Open: London Session | Forex, Metals, Oil, Agriculture December 05, 2022

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Currencies

Yet, at the same time, the structural long dollar positions built for the better part of the past two years are unwinding. It s primarily driven, it would appear, by an attempt to get out of positions betting on the dollar. If we look at the popular dollar index, we find that after an extraordinary rally it is now below its 200-day moving average. Dollar erases more than half of this year gains on Fed rate bets. This comment from Marc Chandler of Bannockburn Global Forex explains the issues:The momentum indicators continue to show the dollar is oversold.
| After the euro s best month since 2010, traders counting on a traditional year-end rally may be disappointed. King Dollar is in ill health. Dollar-functional exporters who had been allowing the USD balance to grow are being forced to act.

Metals

With a beta of 1.6, silver tends to echo and amplify the swings in gold, meaning about a third less cash is needed to gain the same exposure. However, you need to deploy more of your portfolio to gold to gain that exposure.

Oil

Unchanged OPEC+ responded to surging volatility and growing market uncertainty by keeping its oil production unchanged. The design of the cap, which kicks in today, makes clear the US and EU want Russia s oil to keep flowing. OPEC+ oil output, China s Covid pivot is accelerating and Saudi crown prince is said to invest in Credit Suisse. Meanwhile, European Union sanctions on crude exports from Russia come into effect on Monday, and China is tentatively easing the Covid measures that have eroded its fuel consumption.
The oil producers group has only just implemented the hefty 2 million barrel-a-day reduction agreed at its last gathering. EU sanctions on Russian oil take effect. More From Bloomberg Opinion: Niall Ferguson: The Dangerous Wisdom of Chinese Crowds Julian Lee: Is OPEC+ About to Cut Oil Output Again?

United States

There has been plenty of economic data since then, including surprisingly strong jobs numbers last Friday, and a lot of interventions by Fed governors. The meeting s latest draft conclusions were changed to note the preliminary progress made on the US law. But if we look at the fed funds futures market, they haven t changed much. Credit Suisse Investment Saudi Arabia s Crown Prince Mohammed bin Salman is preparing to invest in Credit Suisse s investment bank, the Wall Street Journal reported.
The US-EU Trade and Technology Council holds a ministerial meeting in Washington. Amid talk of a breakthrough with the US, the real response will come from the EU.

Europe

The EU has taken notice and is holding a summit tomorrow in Albania s capital, Tirana, to try to demonstrate its commitment to the region. Macron says he and Biden will “fix US climate- subsidy conflict. The UK Trade Policy Observatory estimates that UK exports to the EU decreased by 14% after the UK-EU Trade and Cooperation Agreement went into effect on Jan. 1, 2021. Christine Lagarde and several other ECB policymakers speak today. ECB s Villeroy wants 50 basis-point hike to fight inflation.

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