Oily currencies to climb
By Peter Rosenstreich
Although prices of crude oil are hitting 2017 highs, the currencies of producing countries have yet to join the party. The Canadian dollar and the Norwegian kronor have diverged from crude in recent weeks: not uncommon, but rare over the mid-long term. With US interest rates stabilizing, look for CAD and NOK to catch up to higher oil.
Oil prices (West Texas Intermediate) are looking to break resistance at US$55.03 per barrel. Declining inventories and solid demand growth have overcome weather and geopolitical issues. Brent crude is now trading above US$60 per barrel, and futures backwardation has invited deeper buying in the long end of the curve.
NFPF rather than TGIF
By Arnaud Masset
Today is Non-Farm Payroll Friday – or NFPF – which will likely spur some action in the USD. After September’s disappointing decline, October is expected to come in with 313,000 new jobs. Investors will watch average hourly earnings, anticipated to rise 2.7% annually in October versus 2.9% in September. Otherwise, dollar traders are focused on President Trump’s tax plan, which will knock inflation and growth, should it be approved.
Jerome Powell’s nomination as next Federal Reserve Chairman came as no surprise. The USD barely reacted. Trump chose stability and continuity. US treasuries lost some ground, especially on the curve’s long-end. The 10-year eased to 2.35%, while the 30-year returned to 2.83%.
China’s gold markets tightening
By Yann Quelenn
In China, gold reserves and production are falling while consumption is rising. This significant market should keep prices headed higher within the next few month.
Gold’s price remains above US$1,270 per ounce, up 6% so far this year. Chinese consumption has increased in the first 3 quarters of this year at 15.49% annually. Meanwhile, China’s gold output has fallen 3.76%. On top of that, Chinese production regulations have been tightened, particularly regarding waste from gold mining. Chinese authorities worry that the environmental impacts of mining outweigh the financial proceeds.