Open: London Session | Forex, Metals, Oil, Agriculture October 22, 2020

Malaysian palm oil futures firmed for a third straight session, as fears over declining output helped offset the pressure from weakness in prices of rival soybean oil. Raw sugar futures on ICE were lower on Wednesday, with the market slipping back from a 7-1/2 month peak set early this week. But neither U.S. nor Brazilian agencies seem to think Brazil will start importing U.S. soybeans, at least in the short term. COLUMN-Has Brazil become a new customer for U.S. corn and soy exporters?

Euro area inflation also remains low (the euro area is actually experiencing deflation, most recently), and as such the euro’s real yield has practically improved. Using the central bank rates of EUR and AUD, we adjust for euro area inflation and Australian inflation (year over year), respectively. On the other hand, the dollar too looks weak as indicated by the dollar index. My best guess is that the only thing keeping the dollar index from breaking down is the delay of the U.S. Congress in passing another stimulus package.
Since gold is priced in dollars, a weakening U.S. dollar index (DXY) is typically uplifting for gold prices. The dollar index was nearly flat against a basket of currencies at 92.801, having marked its lowest level since September 2 overnight. A stronger euro could put strain on the euro area’s current account, due to pricier exports and more international purchasing power making imports cheaper. The euro edged 0.11% lower against the dollar to $1.8465, a fraction below a one-month high of $1.8805 hit on Wednesday.
The trend is clearly bearish and the weakness in dollar is likely to continue which will drag the index lower. Indeed, the dollar index appears to be on the verge of another breakdown, as can be seen in the following graph.

Hundreds of financial products track gold and silver prices, but few confer legal title or allow investors to take possession of physical metal. To assure ownership, gold and silver bullion must be stored on an allocated basis, meaning the metal is held exclusively for you – the titleholder. When acquiring gold, silver or platinum, you need documentation to prove you own the bullion and can take physical possession if desired. Silver, meanwhile, should continue to follow gold’s lead and should have little trouble overcoming its nearest high of $30.
This year’s prior stimulus efforts created some inflationary pressures and boosted the gold price. Metal investors have had a stellar 2020 to date, as the gold price gained nearly $600/oz. Gold’s weakness really began in early August when U.S. Treasury yields began climbing from a multi-year low. If nothing else, the break below gold’s 50-day MA confirmed that the bulls temporarily lost control of the metal’s intermediate-term trend.
Realistically, that cannot be done by broad diversification, but will instead require paying for hedges, such as put options on the S&P, or VIX options, or maybe gold. This period of choppy trading action has left many participants with an uneasy feeling that perhaps gold’s bull market is over.

started us off this week with a good reading on GDP, though it looks like crude oil demand is softening a bit. West Texas Intermediate (WTI) crude futures fell 0.6% to $39.79 a barrel and Brent crude futures wer 0.48% lower at $41.358 a barrel. Crude oil prices shot up in the middle of the previous session, only to erase all of those gains overnight. With southern home to most of the country’s oil production centers, we would expect to see a risk premium develop if the violence continues.
“PVM states that, if you’re betting on oil lately, you may as well flip a coin.” Force majeure declarations were lifted in September, and October has seen the resumption of production from key oil fields, notably , Libya’s largest. Libya continues to advance, both in terms of peace prospects and oil production. That’s problematic for leaders determined to prevent a return to early-year crashes for the price of oil. Both sides have agreed on a variety of measures, from an end to the fighting to who guards the oil.
“It is too early to talk about the future of the OPEC+ deal beyond December,” he said.

One of the emails, reviewed by the cyber research firm Proofpoint, said you will vote for Trump on Election Day or we will come after you. In addition, the Fed two days later cut the federal funds rate an entire percent, to 0–0.25 percent, and injected an additional $700 billion in liquidity into the markets. A Trump victory in Florida would thus sharply increase the risk of a contested election, and of a second Trump term. That may be no bad thing, as far as markets are concerned; gridlock, but without the sometimes dangerous unpredictability of Trump, might suit them well.
On February 11, 2020, Federal Reserve chairman Jerome Powell delivered a semiannual report wherein he laid out the present risks that both the Fed and the federal government face. Since March and April, both the Federal Reserve and the US federal government have injected trillions into the economy in hopes of stabilizing it and reducing unemployment. In practice, a clear Biden victory in Florida would render it almost impossible for Trump to win the electoral college.
If Trump were to win Florida, then his chances of victory would be far higher. President Trump on Wednesday said that Biden “will destroy our economy” with his plan to raise taxes. Trump won’t give up easily, and in key battleground states, voters are very motivated to vote.

As long as Chinese media outlets suffer actual harm, Beijing will definitely retaliate, and US media outlets’ operation in HK could be included in retaliation list. When earlier this year Washington designated the first nine Chinese state-run outlets, Beijing retaliated by expelling about a dozen US media correspondents from Chinese soil. Although Taiwan’s government claims itself as an independent country called the “Republic of China,” Beijing considers it a Chinese province that must rejoin the mainland.
In short, Beijing wants a full accounting of everything going on at local developers. Beijing’s increased militarization of its southeast coast is very suggestive of preparations for an invasion. Relations between Beijing and Taipei have deteriorated since Tsai Ing-wen from the independence-leaning Democratic Progressive Party was elected president in 2016. Xijin further suggested a is being prepared by Beijing authorities.

Vaccine trials are set to resume, Brexit talks are back on, and a top U.S. intelligence official warned of Iran meddling in the election. A new EU debt market could provide EUR with a natural level of demand over the longer term. John AingerWhat s HappeningKicking Cans | In the ongoing yo-yo of Brexit talks, we have a new target date for a deal. Brexit deal hopes and mixed inflation data helped to lift the currency. There’s been some comments suggesting that the ECB is not ready to ease, but if the economy freezes up from a second wave, it will have no choice.
We also publish the Brexit Bulletin, a daily briefing on the latest on the U.K. s departure from the EU.