Open: London Session | Forex, Metals, Oil, Agriculture September 17, 2020



MARKET NEWS Chicago soybean futures were little changed, after hitting their highest since June 2018 earlier in the session on the back of increased demand from top importer China. ICE raw sugar futures extended their recovery on Wednesday, steadying above the 12-cent mark as the dollar slid further and oil prices recovered. On Wednesday, most-active November soybeans finished at $10.11-1/4 per bushel, up 15% since the Aug. 12 report from the U.S. government.


The euro dropped 0.4 per cent to $1.1767 while the Australian dollar lost 0.35 per cent to $0.7279, having erased earlier gains made after stronger-than-expected local jobs data. Also, the dollar looks positive today as indicated by the dollar index. Dollar indexThe dollar index, that closed flat yesterday, has been rallying today. The Australian dollar traded at $0.7304 after the countrys jobs data showed employment rose in August. Stocks had a bad day, while bond yields ticked up a bit and the dollar strengthened slightly.
That’s why the pound probably has farther to fall: a WTO/no-deal scenario would likely lead to a test of parity for sterling against the euro. above 94, the outlook can turn positive for the dollar index. The rupee (INR), after closing with a marginal gain on Wednesday, opened with gap-down today against the dollar (USD). Strengthening dollar can weigh on the local currency.


Malaysian palm oil futures climbed 3% to hit an eight-month high, tracking gains in Dalian oils and on increased demand from China ahead of a key festival week. Unless the outlook for oil improves and offshore drilling picks up materially, the “survivors” will not be able to avoid their own restructurings. “Everyone has decided that we’ll never have inflationary pressure again, oil prices will never go up again.

United States

One unintended consequence, of the Fed’s position, is that the risk premium for corporates, high yield, mortgage bonds, and the like, has also been significantly minimized. But the Fed seems to have found an element of truth in it, to judge by reactions to the latest monetary policy announcement by the Federal Open Market Committee. One government, another government, and both are going to push on the Fed to hold our interest rates at historically low levels.
Moreover, one administration or another, as our election nears, I expect no significant move in the Fed’s current policy. Setser suggests that U.S import prices, largely for electronic goods, may be driven more by producer-price inflation and nominal exchange rates, and I fear he is right. Trump also mentioned the UAE’s desire for US-made F-35s and said he would “personally not have a problem” with the UAE acquiring the warplanes. The key question now is how does the Fed actually implement this new approach?
“The key question now is how does the Fed actually implement this new approach. The key question now is how does the Fed actually implement this new approach. Consequently, there have been intended actions and unintended actions that have accompanied the moves made by the Fed.


In our last Brexit update, we rated a rudimentary trade deal and a WTO/no-deal exit as being equally likely. The EU’s executive arm will publish a set of guidelines today clarifying what kind of spending is eligible from the gigantic rescue package agreed between the bloc’s leaders. Johnson’s government has proposed a new law that would unilaterally revoke part of the withdrawal agreement, which was only negotiated with the EU last October. We still think these probabilities are very close, but recent developments may now make the WTO version of a hard Brexit the most likely route forward.
The most likely outcomes are now the hardest and most disruptive Brexit scenarios – leading to further potential weakness for the UK’s currency. But this type of thinking has been a very poor guide to Brexit outcomes so far and minimizes the importance of ideological differences on both sides. Merkel’s Burden | Whether the plan becomes reality likely hinges on Angela Merkel.
The Brexit saga has seen many unexpected twists and turns since the original departure vote in 2016. We also publish the Brexit Bulletin, a daily briefing on the latest on the U.K. s departure from the EU. Tune In | Want to know more about the EU’s push to lower carbon emissions?