Open: London Session | Forex, Metals, Oil, Agriculture October 07, 2020



U.S. cotton exports to China hit a seven-and-a-half-year high in August, while corn shipments to the Asian country reached an all-time record. MARKET NEWS Chicago wheat futures slipped from their five-year high hit in the last session, but losses were limited by concerns over dry weather in key exporting nations. Raw sugar futures on ICE rose 2% on Tuesday to a seven-month top as weather worries in several producing regions reduce expectations for a supply surplus in 2020-21.
The problem with fiscal injections used for consumption is that it’s only a short-term sugar high that ends in a crash if more is not seen. 2 and 3 items in August, was less than half that of soybeans, emphasizing the importance of the oilseed in the trade relationship. But the combined export value of cotton and corn, the No.


Brent crude futures fell 1.5 per cent to $42.01 a barrel.Spot gold was steady at $1,879 an ounce after being whacked by a rising dollar overnight. When policy in the euro zone is tight, as has been the case for much of the last decade, then pricing power and profitability decrease. Coming Up Euro Stoxx futures are pointing to a negative open, tracking similar moves in Asian markets, while U.S. futures are fluctuating. The dollar was steady at its highest level for the week so far.
Euro-area core inflation has surprised to the downside lately and hit a record-low in September.


Global copper demand for solar and wind energy systems is expected to rise by 56% by 2027 from 2018 levels, according to research by the International Copper Association (ICA). Copper is an important component in electric vehicles, used in the batteries, windings and copper rotors of electric motors, as well as in the wiring and charging infrastructure. The rebound in copper prices has led to COMEX copper futures going from a large net short to a fairly large net long.
The global economy, too, might identify higher or lower growth based on copper’s wide use and unique demand patterns. China’s switch to renewable energy systems is likely to be a key demand driver for copper moving forward. At an average of 83kg of copper, the typical electric vehicle uses nearly four times as much of the metal as a conventional car. The world’s two largest copper producers, Chile and Peru, continue to face severe COVID-19 outbreaks. In Peru, copper output fell by 42% in May, while Chile’s state-run miner Codelco has temporarily closed its largest smelter and refinery and suspended construction at its flagship mine.
For the first six months of 2020, copper imports totalled 2.84 million, a 25% increase on the same period of 2019, despite the disruption caused by COVID-19. Over the medium to longer term, the great importance of copper to China’s economy could support prices.


In addition, by 2025, the U.S. shale oil and gas production is expected to exceed the total oil and gas production of Russia. However, it is critical to note that the effect of the coronavirus crisis on the natural gas market is much smaller than the effect on the oil market. In fact, the global demand for natural gas is expected to grow 36% over the next two decades, primarily thanks to an increasing industrial demand. The Energy Information Administration [EIA] expects the average annual U.S. demand for natural gas to decrease only 2.7% this year, from 85.0 Bcfd in 2019 to 82.7 Bcfd.
Six offshore oil and gas fields shut down on Monday because of the strike, cutting the country’s output capacity by 8 per cent. Malaysian palm oil futures firmed on lower production outlook amid wet weather and tightening coronavirus restrictions, but weaker crude and soyoil capped gains. This decline is nearly one-third of the 8.2% decline expected in the global demand for oil products this year.
Source: Investor Presentation The U.S. is likely to provide approximately 30% of the increase in the global demand for natural gas.

United States

If the Fed means business in the new average inflation targeting regime, they will likely have to increase asset purchases later this year again. We adjust our shorter-maturity US bond yield forecasts slightly higher, as the Fed has moved away from outright yield-curve control ideas, while another operation twist has been mentioned. The rally following the Trump and Republican clean sweep in 2016 owed much to the reflation trade and ongoing growth optimism.
Second, the US market has also benefited from having a much more concentrated stock-level performance effect. Indeed, the US has gained much of its edge since June, when the rally elsewhere began losing steam. Yields to rise only gradually despite recovering economy Our new bond yield forecasts for Germany and the US FX: The end of King USD? The ECB will boost its asset purchases in December, while yield curve control by the Fed now looks less likely. Patrick Harker, governor of the Philadelphia Fed, said that the economy needed at least $1 trillion in stimulus, as soon as possible.
After shrinking in the aftermath of the financial crisis, UBS did away with much of its fixed-income business which Credit Suisse would complete. The Trump strategy is now evidently to mobilize his base, even if this comes at the cost of a hit to the stock market.


Even if the ECB’s forward guidance clearly states that rates are expected to remain at their present or lower levels, further rate cuts are not among the preferred tools. Instead, the ECB has already gone around cutting rates by lowering the TLTRO rate, and can cut that rate further, if needed. If the U.K. and EU are within decent distance of each other, they could decide to outline a deal, but agree that a new implementation period is needed. As talks between the EU and the U.K. over a trade deal go to the wire, negotiators are back in London today, rushing to hammer out a deal.
Lagarde herself has stated that the central bank considers other policy tools to be more effective than another rate cut. The number of Covid-19 cases has shot up, new restrictions are being introduced, the recovery is experiencing bumps and the important US elections and Brexit deadlines are approaching. As the Brexit talks enter their final critical few weeks, officials on both sides are voicing doubts over whether they can get a deal over the line.
Economic recovery already experiencing some setbacks ECB will ease again in December Recent comments from the ECB have not illustrated a central bank in a hurry to ease further. EU action could consist of asset freezes and travel bans for Russian officials, while the Nord Stream 2 gas pipeline between Russia and Germany is likely to be spared. But it might be down to Emmanuel Macron too, with the French president’s hardline stance on fisheries looking increasingly like the toughest nut to crack.