Open: New York Session | Forex, Metals, Oil, Agriculture September 10, 2020

A member of the National Guard plays a trumpet during a flag rai

Agriculture

Increased poultry demand from the world’s largest ag importer should further boost soybean demand since poultry feed is heavily based on soybean meal. Vegetable oil, which is also a major use for soybeans, is also in very high demand globally, which is another long-term support for the soybean market. But as long as soybean futures price remains above 940 (or $9.40 per bushel) on a weekly closing basis, I consider the dominant short-term trend to still be bullish.
Don’t look now, but the November soybean contract is the top-performing grain among U.S. commodity futures of the past month. Corn and bean prices are said to be soaring in China, with food price inflation in that country hitting its highest level of the last 10 years. Unsurprisingly, one of the biggest price catalysts for the soybean market right now is China. Moreover, the corn shortages in China are reportedly causing some end users to switch to other grains and oilseeds – including soybeans – for animal feed use.
Add to that the news that China is already in the market for more U.S. soybeans and the market has another short-term set of positive fundamental supports. From a technical perspective, soybeans are one of the few actively-traded commodity futures contracts which have managed to post a new 52-week high this month. Here we’ll discuss that and additional factors which bode well for the intermediate-term (3-6 month) soybean price outlook.

Currencies

“Inflation comes from the strength or weakness of the dollar and the Fed has no practical means of controlling the value of the dollar,” he says. less A strong recovery in US stocks, a softer dollar, and higher gold and oil prices may signal the end of the brief, though dramatic correction. In global markets, gold prices moved higher, supported by a weaker US dollar and concerns that a coronavirus vaccine could get delayed. Despite recent market turmoil, the stock has held up fairly well, and a weaker dollar will certainly help results in the short term.
“Unprecedented expansion of monetary aggregates has weakened the U.S. dollar and put upward pressure on inflation expectations,” the bank said. Sterling’s dramatic recovery yesterday from $1.2885 back above $1.30 reflects the US dollar’s setback rather than a bullish pound view. The dollar index fell from a four-week high against its rivals making gold less expensive for holders of other currencies, said a Reuters report.
The Australian dollar is consolidating yesterday’s recovery and is in about a quarter-cent range above $0.7260. Gene comments on stock, bond, dollar, oil & gold markets, with a particular emphasis on monetary policy, technology issues and S&P intraday action. ET, where we will listen for whether she talks down the recent euro strength against the dollar.

Metals

The revised rules should help reduce exchange rate volatility as domestic gold prices are linked to global gold prices, Vachira Arromdee told reporters. Barrick, the world’s second-largest gold producer, lost a key court challenge last week over rights to the Porgera gold mine. SILVER HOLDING STEADY AS PRICE CONVERGES WITHIN A BASIC SYMMETRICAL TRIANGLE After August highs, spot silver has somewhat consolidated tracking its precious metal counterpart, gold.
Gold is now down about Rs 5,000 per kg from record highs of about Rs 56,200, hit last month. In news from the commodity space, domestic gold prices continued to trade in a narrow range. Gold futures on MCX rose 0.1% to Rs 51,439 per 10 grams. Gold traders are now tracking the European Central Bank’s policy announcement due later in the day. S&P 500 futures pointed to a drop at the open, the 10-year Treasury yield was at 0.694% and gold edged higher. The silver lining was that BBBY’s online sales were stellar; net sales through digital channels spiked over 80% and represented about two-thirds of total net sales.
It also processes and sells recycled ferrous and nonferrous metals and operates a steel fabrication business that manufactures products for the nonresidential construction industry.

Oil

In commodities, oil prices dipped as U.S. crude stockpiles rose and the U.S. Energy Information Administration downgraded its oil demand outlook. China is planning to increase its vast stockpiles of oil, metals and food, people familiar said, sending oil and agricultural stocks higher. Crude inventories rose by 3 million barrels in the week to Sept. 4 to about 504.1 million barrels, compared with analysts’ expectations for a draw of 1.4 million barrels. Evidence of swelling stockpiles can be seen through shipping data which shows leading commodity traders are booking tankers for crude oil and diesel floating storage purposes.
The EIA has already cut its 2020 world oil demand growth forecast by 210,000 barrels per day (bpd) to 8.32 million bpd. August crude palm oil output grew 3.07% from the previous month to 1.86 million tonnes, MPOB said on Thursday. This has led the US Energy Information Administration (EIA) to cut its world oil demand growth forecast by 210,000 bpd to 8.32 million bpd.
Nations worldwide, including the United States, have throttled back oil output in response to the coronavirus pandemic, and as fuel demand has dropped sharply. A resurgence in coronavirus cases, poor weather and the end of the northern hemisphere’s summer driving season have slowed global oil trade and shipping demand. The closure of some U.S. oil refineries will have a net benefit to the company’s refined products pipeline systems, the company’s chief executive officer said on Wednesday.

United States

By wanting to increase the rate of inflation higher than its longstanding target, the Fed is saying it wants to reduce the value of your earnings and your savings. The federal funds rate (or fed funds rate) is the rate at which banks lend balances to each other overnight. 1): The ECB now has an inflation credibility problem – with market-based EUR inflation breakevens diverging away from their equivalent in the US and UK (Fig. He said public pressure on the White House may ultimately cause Trump to make the concessions needed to get a deal over the line in coming weeks.
Up 3 per cent on Wednesday, the Nasdaq 100 Index scored its best gain since April, bouncing from a correction that took all of three days to complete. Many major European indices had been relatively immune to the histrionics in the US market and also rallied yesterday as they look toward key cycle resistance once again. Given that this is an election year, Mr. Market set up the head table for guests wearing Donald Trump and Joe Biden masks.
From Last Wednesday’s record high of 3588.11 through Tuesday this week, the S&P 500 large cap index dropped 7.2 percent, while the Nasdaq 100 index tumbled 11.1 percent. It’s hard to see the Fed achieving higher inflation, given its recent failure in this matter. The NASDAQ Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange.

China

It s the latest U.S. business to be embroiled in political controversy involving China amid heightened economic tensions between Beijing and Washington. Meanwhile, the “firm countermeasures” that Beijing has threatened against U.S. officials have yet to be felt across the Pacific.

Europe

We expect that after the ECB press conference, attention will swing back to next week’s FOMC meeting, where a more overtly dovish posture is likely. A dovish ECB tilt at the meeting is almost certainly the baseline case for markets going into the event. The EU is angered with a draft bill presented to the British parliament that violated the Brexit Withdrawal Agreement – and may press charges against the UK. The EU and the U.K. are holding emergency talks after the latter published its Internal Market Bill, which would undercut parts of the Withdrawal Agreement agreed to in January.
There is also a good chance we see the ECB emphasise that policy rates will remain low for a very long time. Talk is cheap and we think (signs of) concrete ECB action may be needed to take EUR/USD lower from here. Reports state that the ECB is expected to hold rates steady but indicate that downside risks have intensified, suggesting further easing is possible before year-end.
The ECB is expected to hold rates but new updates on growth and inflation will be key to gauging what’s next for policy.
Coming up…As well as claims and the start of the ECB press conference, 8:30 a.m. also sees the publication of August U.S. PPI. This does not mean that Christine Lagarde will have an easy time in the press conference starting 45 minutes later.

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