Open: New York Session | Forex, Metals, Oil, Agriculture June 17, 2021

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Agriculture

Spurring prices | Tight supplies, especially potash, and high corn prices continue to keep a hot fertilizer market surging. Spring rains showered fields in the Black Sea region, U.S. Plains and European Union, bolstering prospects for the approaching winter-wheat harvest across major suppliers. In news from the engineering sector, Greaves Cotton was among the top buzzing stocks today.

Currencies

The US dollar (USD) strengthened, and as a result, the dollar index posted an intraday gain of about 1 per cent, the highest daily gain since March 12, 2020. Dollar appreciating further would indicate a difficult period for the rupee.As the dollar strengthened, the price of crude oil declined yesterday. Gene comments on stock, bond, dollar, oil & gold markets, with a particular emphasis on monetary policy, technology issues and S&P intraday action. However, rising crude oil prices and the consequent higher inflation, along with the rising dollar can have a negative impact on the rupee.
BEFORE THE BELL Canada’s main stock futures were nearly flat, with a stronger U.S. dollar weighing on oil and gold prices. Image Source: Pixabay Dollar buying stepped up as the Fed dramatically raised its inflation expectations for this year and rolled forward the timeline for the next rate hike. While many dollar bears cut back short bets this week amid speculation the Fed could surprise, a quick look suggests there is more to go.
Yesterday’s dollar buying was ruled by emotions, since nobody expected the tapering timeline to be moved ahead. At the interbank foreign exchange market, the domestic unit opened at 73.65 against the dollar, registering a decline of 33 paise over its previous close. We start with the possible bottom the US Dollar has put in and how much higher it could go from here.

Metals

Citigroup assessed that going by past purchase and sales record, Beijing could have two million tonnes of copper, 800,000 tonnes of aluminium and 350,000 tonnes of zinc as reserves. No, neither ETF correlates exactly with gold prices all of the time, but GLD correlates closely enough with gold that it’s useful as a proxy. Tracking an overnight crash in global rates, gold prices plunged in Indian markets in early trade today. Gold prices for the latest contract on MCX are trading down by 1.9% at Rs 47,570 per 10 grams.
Gold prices are trading up by 1.9% at Rs 47,601 per 10 grams. As per RBI data, total reserves stand at $605 billion, which includes foreign currency assets and gold. In global markets, gold fell more than 2.5% overnight after the US Federal Reserve signaled it might raise interest rates sooner than expected. In 2005, China offloaded copper from its reserve in an attempt to cool prices down after a government trader hedged wrongly.
Copper (JJC) prices are lower for the third time this week. We’ll show a couple of ways of doing so using the SPDR Gold Trust (GLD) as a proxy for gold below.

Oil

Oil prices dipped, but losses were limited by a big drop in U.S. crude oil inventories. Besides the crude oil price, the food inflation rose considerably, contributing to the overall increase in inflation. The US Energy Information Administration (EIA), yesterday, reported a decline in crude inventory to 7.4 million barrels over the week, higher than the expected drop of 3.3 million barrels. Suffering from this slower recovery and higher oil prices, jet fuel margins fell to a more than two-week low of $5.70/bbl, down from $6.13/bbl, Refinitiv data showed.
A larger than expected draw of US inventories (-7.3 mln barrels) may be helping limit oil’s pullback. The NOK has puzzlingly weakened since the announcement, and is now clearly weaker than fundamentals (oil prices) would suggest . Refinitiv Oil Research is tracking another newly built VLCC Seaduke, which is currently signaling Fujairah and is expected to load gasoil from the region. Exports to Europe/Med were assessed at just 240,000 MT, up 60,000 MT w-o-w, loaded onboard two Aframax and a Panamax tanker.
The destination is not yet confirmed but the vessel will mostly likely head to Lome (Togo).
Aframax tanker Ashley Lady loaded from Jebel Dhanna/Ruwais (UAE) and is underway to Pakistan.

United States

The US central bank projected at least two interest rate hikes in 2023, a year earlier than forecast in the March meeting. less The FOMC’s “hawkish” dots for their June 2021 assessment weren’t an acknowledgment of recent inflation data in the US. I m happy to see the formal solo conference survive after Trump almost abandoned it in his first three years (averaging just three a year). The Fed surprised the market by signaling that it might raise interest rates at a much faster pace than initially anticipated.
The Fed upwardly revised US GDP & inflation and accelerated the timetable to normalizing monetary policy. There was an interesting reaction in the bond market today in response to the Fed penciling in rate hikes that I doubt happen. Image Source: Unsplash Data shows the US 30-year mortgage rate rose to an average of 3.3% this year. Trump shied away from solo press conferences until his final year, but did a lot of joint ones with foreign leaders and took plenty of questions in other formats.
The US regulator kept the target range for the federal funds rate at 0.00-0.25% and left the scope of the asset purchase program unchanged at $120 bln per month. But Fed’s language is mildly hawkish since there are indications of bringing the rate hikes forward.

China

In our view, this signals that Beijing is mainly aiming to rein in unfair competition and monopolistic behaviors regarding data. Pixabay To be sure, Beijing was already moving into import-substitution strategies and took another step today. The spike has been impacting Beijing’s export and economy.

Europe

The EU competition enforcer can clear the deal with or without demanding concessions. The company has said it will pursue a dual-track tactic, launching litigation against the Commission while following the EU merger process.

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