Good morning,
DXU9 96.940 +0.123 GCQ9 1426.4 -0.3 ESU9 2984.50 +7.50 CLU9 56.37 +0.61
Oil grasps the limelight this morning, in a continuation of the story from Friday where a UK tanker was seized by Iran. Oil prices recovered from lower levels in the late trade on Friday, and gapped higher from Friday’s settle in the trade overnight. The prices are still substantially below levels seen last week, and the market will be watching for further escalation of the tensions. The dollar is firmer today, aided by a clarification from the Fed on comments made midweek, which had the market thinking the Fed may very well cut rates by 50 basis points at next week’s meeting. The clarification that an insurance cut is likely, and that it would be 25 bps, had fixed income markets pull back late Friday and supported the dollar. Gold prices are still holding a bid, not only with the Middle East tensions, but with the unrest in Hong Kong as well. Fed officials are now in the quiet period ahead of next week’s meeting, so there shouldn’t be any comments hitting the tapes.
The grain markets are lower today, having survived the excessive heat that swept across the country. Rain showers both preceded and followed the heat front, alleviating some of the stress. Forecasts for this week appear picture perfect for crop development, so prices are working lower. This afternoon brings an updated look on crop conditions and progress. Weather will be the dominant input for the grains, aside from a completed trade deal, for the next couple of weeks before the market focuses on the planting re-survey from the USDA and the August WASDE.
Cotton continues higher with the bounce observed on Friday, following prices trading at a 3 year low on Thursday. The renewed hope of a trade deal, initiated with reports that the US and China would resume phone talks, provided support to a market expecting an abundant harvest. Coffee futures are continuing to leak lower, following Friday’s trade, as the colder weather in Brazil is not thought to have enough frost to risk damage to the crops.
The calendar is looking like a relatively quiet economic week, data wise. The highlight will come on Friday, with the first look at 2Q GDP figures. The Middle East, the outcome of the UK election and positioning in front of a shift to US monetary policy should be the drivers for the market this week.
Technical Moving Averages:
Product 50 day 100 day 200 day
SX9 896.25 907.50 924.75
CZ9 433.25 411.50 406.25
WU9 507.00 486.25 513.75
KWU9 455.25 450.25 495.50
MWU9 549.25 549.25 572.00
SMZ9 317.9 316.7 319.2
BOZ9 28.30 29.06 29.62
CLU9 57.62 59.61 58.77
GCQ9 1354.0 1328.5 1304.4
LHQ9 83.995 88.585 84.905
LCQ9 106.140 111.050 112.275
KCU9 102.10 100.35 108.60
CCU9 2442 2374 2332
CTZ9 66.12 70.68 73.15
SBV9 12.37 12.67 12.99
JOU9 104.20 110.65 122.65
HGU9 269.20 280.05 278.65
Have a good day,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404