Open: New York Session | Forex, Metals, Oil, Agriculture September 16, 2020

Agriculture

Agricultural Department showing a six percent drop in soybean production from August, soybean prices have another built-in support in the near term. Indeed, soybeans are benefiting the most from this trend (compared to other major ag commodities) due to the huge market for the crop in top-importer China. What’s more, soybeans will also have some near-term support from the rising momentum in the broader commodities market. Below, you can see the company’s revenues, against the price indices of corn and soybeans, which go hand in hand, and are immediately related.
Here we’ll survey the latest data which supports my conclusion that soybeans should be a major beneficiary of this inflationary trend. With the exception of minor production corn issues in Q2, the company’s processed volumes remain primarily solid on a quarterly basis. But the most conspicuous reason for soybeans’ bull market is inflation. Sugar prices at the Vashi wholesale market ruled mixed on Wednesday.
The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,282 – 3,352 and M-grade 3,386 – 3,502 .

Currencies

The RMB moved from 6.951 to 6.770 per dollar – equating to a stronger RMB, or a weaker dollar. The Fed’s soft monetary policy stance will keep the dollar under pressure until it morphs into a safe haven in the event of a stock market crash. Gene comments on stock, bond, dollar, oil & gold markets, with a particular emphasis on monetary policy, technology issues and S&P intraday action. The Chinese RMB has strengthened against the dollar in the region of 2.5% in the last four weeks, as the below graph from XE currency exchange firm shows.
The rupee witnessed high volatility against the US dollar in opening trade on Wednesday ahead of the US Federal Reserve’s policy decision. In turn, the safe-haven US dollar could find demand and gain ground against the euro in this case. Losing nearly quarter per cent, the rupee (INR) yesterday closed at 73.65 after marking an intraday low of 73.73 against the dollar (USD). Goenka further said that “the threshold for the US dollar to weaken from current levels is high as a lot of dovishness has already been factored in.
Although a weakening dollar throughout the session also helped provide some support. This could drag on demand for the US Dollar, which has been under pressure this week heading towards the FOMC announcement.

Metals

When it comes to the price of gold, there is always much discussion in the gold space regarding the COMEX futures exchange. Even with the recent volatility in prices, gold and silver remain among the best-performing commodities this year to combat the fallout from the coronavirus pandemic. Therefore, it’s always worth scrutinizing COMEX trading to be sure the gold price is a fair representation of supply and demand. Domestic gold and silver prices traded in a narrow range ahead of the US Fed decision.
Over the last three weeks, gold is trading in a narrow range since hitting record highs of Rs 56,200 last month. Gold prices appear to be nearing the end of a consolidative period following their aggressive rally in late-July and early-August. Earlier, gold had hit a record high of Rs 56,191 in Indian markets amid a global rally. Gold prices are currently trading up by 0.2% at Rs 51,860. Gold prices are currently trading up by 0.3% at Rs 51,920.
London copper prices rose, with the market erasing earlier losses to trade near its highest in more than two years on expectations of strong demand from top consumer China.

Oil

Oil prices jumped as a hurricane closed U.S. offshore production and an industry report showed U.S. crude inventories unexpectedly decreased. A report by an industry body that put the US crude oil inventory weekly change at a 9.5 million bbl draw added further momentum. Oil prices jumped over 2% after data showed that U.S. crude inventories unexpectedly declined. Brent crude futures, the global oil benchmark, rose 1.48 per cent to USD 41.13 per barrel. Brent crude oil, the global benchmark, rose 2.3% to $41.45 a barrel and West Texas Intermediate futures, the U.S. benchmark, were up 2.5% at $39.24 a barrel.
The West Texas Intermediate Crude Oil market has initially tried to rally during the trading session on Tuesday and even managed to hang on to the gains overall. The hurricane has shut more than a quarter of U.S. offshore Gulf of Mexico oil and gas production and stirred heavy seas that closed ports from Louisiana to Florida. Our economic problems this far into 2020 are not crude oil alone, however, as that interpretation of demand indicates.
Oil giants plan for future with less crude and more hydrogen.Boeing deception alleged in scathing House report on Max crashes. But that’s a more macro concern for now, with higher prices (including food) obscured by lower (OIL) and other prices, even currently.

United States

Market participants would expect further clarifications from the US Fed on how average inflation targeting framework would be implemented,” said Abhishek Goenka Founder and CEO, IFA Global. Inflation trends, of course, require time to unfold, and so, the Fed’s dovish policy may eventually be successful. Transatlantic arrivals of diesel and gasoil were expected to rise this week, as the US market remains under pressure from rising global supplies and a stalling recovery in consumption.
Indeed, the official response to this year’s virus epidemic has resulted in a dramatic shift in the Fed’s policy of fighting deflation to actively encouraging inflation. Will the Fed continue to deliver on the ultra-dovish expectations in line with its new regime of AIT (Average Inflation Targeting) policies? Get ready for another Fed-filled session following the recent symposium in Jackson Hole and the first meeting since Chairman Jerome Powell announced a greater tolerance for inflation.
Benchmark indices edged higher, ahead of the outcome of a two-day policy meeting of the US central bank. As analyst Jerry Welch from Midwest Market Solutions has observed: ….most all markets, including grains, are being supported by the Fed’s desire to spark inflation. Nasdaq Futures are trading up by 11 points (up 0.1%), while Dow Jones Industrial Average Futures are trading up by 71 points (up 0.3%). Nasdaq Futures are trading up by 63 points (up 0.5%), while Dow Jones Industrial Average Futures are trading up by 71 points (up 0.3%).

China

Yet, the dilemma does not seem unmanageable, and Beijing might want to be inclined to make some concessions and give Biden a chance to reset the relationship. As it looks right now, the high-profile deal will set up Oracle as the “trusted tech partner” of TikTok and not as an outright sale, which Beijing has opposed. The private equity powerhouse has raised over $11 billion after the first-close of its fourth Asia-focused fund, its Beijing-based managing director Chris Sun said.

Europe

But it adds pressure for the Bank of England to act later this year to stimulate the economy as the risk of hard Brexit is looming. In a speech today in Brussels, she said the 27-nation European Union will sell $267 billion of green bonds as part of its pandemic recovery fund. He was always seen as Safe hands by analysts who should be able to guide the U.K. economy through the Brexit transition and beyond. Prime Minister Boris Johnson has been seeking to soothe concerns about the controversial Internal Markets bill that passed the first hurdle in parliament.
The legislation violates the Brexit deal that Johnson signed with the EU – as admitted by government ministers. undermines the efforts of French President Emmanuel Macron in Lebanon.” Washington has stood isolated over its decision to enact so-called “snapback” sanctions on the Islamic Republic in late August. Lagarde Leverages Virus to Press for Greener Monetary Policy The pandemic recession is leading Europe s central bankers to join the fight against climate change.
Germany’s ZEW investor sentiment index rose in September despite roadblocks from Brexit and rising coronavirus cases.
In the U.K., a test and trace system described as world-beating by Prime Minister Boris Johnson is short of testing kits. I share the European Union position on China, Vincenzo Amendola, Italy s minister for European affairs, said in an interview.

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