Open: New York Session | Forex, Metals, Oil, Agriculture February 03, 2021



MARKET NEWS U.S. corn futures edged lower for a second consecutive session as prices retreated from a more than seven-year high, though losses were checked by strong demand. White sugar futures on ICE hit their highest in nearly four years on Tuesday, boosted by talk of strong physical demand and supply tightness linked to shipping container shortages. The country is the world’s second biggest sugar producer and the higher output could weigh on global prices.


Dollar indexThe dollar index invalidated the critical resistance at 91.00, which has turned the short term trend bullish. The dollar traded near a two-month high versus the euro as investors looked to a widening disparity between the strength of the U.S. and Europe’s pandemic recoveries. FOREX: The euro traded near a 2-month low against the dollar, as investors looked to a widening disparity between the strength of U.S. and European pandemic recoveries.
Trade strategy While strong inflows are helping the rupee remain steady, the dollar index is clearly indicating that the greenback has turned bullish. less The rupee (INR) witnessed a marginal gain in the past session as it ended at 72.96 versus Monday’s close of 73.02 versus the dollar (USD). In a brief statement late Tuesday, Alibaba said it planned to issue dollar debt, including some bonds to fund sustainability-related projects, subject to market conditions. In FX, the US dollar remains firm as EURUSD suffered its lowest close since early December and threatens the important 1.2000 level.
But notably, the rupee is steady despite the dollar making some considerable gains in the past few trading sessions. The US dollar has been gaining ground as investors sell Treasuries in response to higher prospects of a generous relief package (FXB, UUP). But if the dollar gains become so significant that the rupee weakens from here, it can find support at 73.15 and 73.25.


However, the last week or so, on the heels of the Reddit-Raiders taking aim at Silver, demand for silver (and gold coins) has exploded… the U.S. Mint said Tuesday. less Gold prices edged slightly higher on Wednesday as silver prices attempted to recover some lost ground after falling over 8% on Tuesday. Shanghai copper prices fell to their lowest in eight weeks, while prices also fell in London, as investors were concerned about demand ahead of a major holiday in China.
Sales of U.S. gold bullion coins rose 258% in 2020 while silver coin demand was up 28%, the U.S. Mint said Tuesday. While silver prices swung as much as 20% from January 28th to February 1st, gold prices moved only 1.7% during the same period. Small investors flooded into the silver market in recent days, answering calls on Reddit and other social media to buy massive amounts of metal to push up prices. The London-listed company, which also mines coal, nickel, silver and zinc, stuck to all of its production targets for 2021, after trimming coal guidance in October.
Even with the recent volatility in prices, gold remains among the best-performing commodities this year to combat the fallout from the coronavirus pandemic. The national copper commission Cochilco said that output at Codelco, the world’s largest copper miner, fell 16% year-on-year to 157,800 tonnes for the month. Enthusiasm surrounding the retail trader frenzy led to heightened volatility in silver earlier this week, but the spillover effect on other precious metals wasn’t particularly obvious.


Gasoline stocks were forecasted to have fallen by 240,000 bbl against the poll estimate of a build of 1.1 million bbl. Brent crude futures, the global oil benchmark, rose 0.45 per cent to USD 57.72 per barrel. Focus today EIA’s weekly stock report with API data pointing to another strong draw in crude oil stocks. To view the full Middle East fuel oil report click here (link to be pasted in Eikon search) You can access the full report here . U.S. crude inventories fell by 4.3 million barrels in the week to January 29 to about 477.6 million barrels, data from an industry body showed.
Saudi Aramco recently sold a 600,000 bbl parcel of 3.5%S fuel oil to Reliance. Middle East fuel oil exports dropped by more than half to its lowest weekly volumes in the past two months. Crude pipeline volumes fell 7% to about 2.97 million in the fourth quarter, MPLX said. Meanwhile, a Reuters survey also showed that OPEC s crude output rose in January for a seventh month, although the increase was smaller than expected.
OPEC+ look set to having drained the global oil surplus by the middle of the year.

United States

The Dow Industrials and the Russell 2000 Small Cap Index (IWM) were down one percent and 3.3 percent respectively, but the Nasdaq Composite rallied two percent. The Nasdaq resumed its upward trajectory as the focus shifts back to earnings and away from the retail trader short squeeze frenzy of last week. Extending the gain, the US benchmark indices S&P 500 index and Dow Jones closed last session by posting a gain of 1.4 per cent and 1.6 per cent, respectively.
This could lead to a positive cycle, fed mainly by an increase in service sector consumption, of rapidly improving employment in the service sector leading to better income development. Alphabet (GOOGL) and Amazon (AMZN) posted impressive Q4 earnings besting on both the top & bottom line, rising 7.7% and 1.3% respectively helping to lift Nasdaq futures. less With The Fed printing money ‘out the wazoo’, monetizing COVID relief package debt as fast as Congress can pass the bills, demand for bullion was already surging.
US stock futures are trading higher today, indicating a positive opening for Wall Street. less The Nasdaq 100 rallied a bit during the trading session on Tuesday to reach towards the 13,500 level again. Contracts on the Nasdaq-100 rose 0.8%, suggesting that technology stocks will lead gains, bolstered by earnings reports late Tuesday from and Google parent Alphabet. Trying to step in front of the Nasdaq 100 and short it would be akin to stepping in front of a runaway train.


While inflation turning positive should be a relief for the ECB, most of the reasons underlying today’s spike are temporary and should not affect policy much. We expect the ECB to stay with its forward guidance, implying easy financing conditions until inflation is projected to return to target. Monetary policy being so loose out of the European Union (EZU) and other central banks around the world almost certainly guarantees that stocks will rise over the longer term.
That said, with Brexit behind us and the vaccine rollout gathering pace a solid economic rebound could be on the horizon in Q2 and H2. From that perspective, today’s numbers may ease the pressure on the ECB a little bit. Cabinet Office Minister Michael Gove is demanding the EU ensure the smooth flow of trade between Britain and Northern Ireland, amid rising tensions in the region. Firstly, the multi-year Brexit soap opera ended as best it could with the free trade agreement between the EU and the UK.
The DAX is an index that should be thought of as the “blue-chip index” of the European Union, with some of the largest companies in the world. French President Emmanuel Macron called the sentencing unacceptable, while U.K. Prime Minister Boris Johnson described it as pure cowardice. In the current ECB projections, the path is somewhat slower.