China Action On Commodities And Crypto Featured

The US dollar is a 30-pip range against the yen below JPY109.00, holding just below the 20-day moving average. Last Wednesday, the dollar traded between roughly JPY108.55 and JPY109.35 and had not been out of the range since. The Australian dollar fell for the second consecutive week last week and is trading with a heavier bias today, slipping to a seven-day low near $0.7705. It was turned back from $0.7800 last week. The month's low was set near $0.7675. The bounce in late Asian trading stalled in front of $0.7750, where a A$555 mln option expires today. The Chinese yuan strengthened slightly today and has not fallen since the middle of last week. Still, the consolidative phase continues. The dollar is tracing out a triangle pattern, and tomorrow the borders are found near CNY6.4240 and CNY6.4385. Technically, it is mostly seen as a continuation pattern, which would suggest a downside break for the greenback. However, the pattern will be neutralized if there is no break before the end of the week. The PBOC set the dollar's reference rate at CNY6.4408, every close to what the bank models in Bloomberg's survey anticipated.

Europe

Two new areas of tension in eastern Europe have surfaced. First, at the end of last week, the European Court of Justice granted a temporary injunction against mining brown coal (lignite) at a major Polish mine (Turow) on the Czech border. The Czech Republic had sought action in March due to the negative effects on the level of its groundwater. At the start of the year, the German city of Zittan made similar charges. The owner of Poland's mine, PGE, argues that the continued operation of the mine is necessary to make the transition away from black coal. Black coal accounts for almost half of Poland's energy production compared with less than a sixth for lignite, while renewables account for around a quarter. Poland is threatening to defy the court order. PGE argues that to permanently close the mine hit the nearby power plant that provides 7% of the country's electricity and power to around 3 mln households. Second, Belarus President sent a fighter jet to ensure that a Ryanair plane with an opposition journalist (Pratasevich) aboard was forced to land in Minsk, and the journalist was arrested. The flight was on its way from Greece to Lithuania, and its route took it into Belarus airspace. Lithuania, the EU, and the US have condemned the Belarusian action.

The UK holds the rotating G7 presidency and is credited with a breakthrough when the environmental ministers agreed to stop the financing of all overseas coal projects by the end of this year. It appears that Japan, which is reliant on coal, made some key concessions. The agreement came days after the International Energy Agency called to end all new oil, gas, and coal exploration. There are clear political implications in this green effort. It isolates and increases pressure on China, a heavy user of coal. However, the story is far from over. Next month, the UK hosts the G7 meeting, and these efforts will likely feature in the joint statement. Also, the UK will host the 26th UN Climate Change Conference in November, at which it is hoped that an agreement on climate-aid to developing countries can be reached. The G7 reiterated the goal of $100 bln a year of funding through 2025 but remains unmet. The EU heads of state meet today and tomorrow, and greenhouse emissions are on the agenda.

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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