China Action On Commodities And Crypto Featured

A free-trade deal between Norway and the UK is looking increasingly unlikely. An agreement needs to be struck that could be approved before Norway's elections in mid-September. This gave a late May time frame. The challenge is that the Christian Democrats, along with the Conservatives and Liberals, make up the governing coalition and have voiced opposition on at least three grounds, none of which can be easily overcome. First, it argues that the UK should not be rewarded with greater access to Norway's markets than it had within the EU Second, it was concerned that Norwegian farmers would be at a disadvantage, especially for meat and cheese. Third, the Christian Democrats raised issues about food quality, non-agricultural employment ramifications (food processing and distribution). The Christian Democrats draw votes heavily from rural areas, and its fortunes in the polls appear to be sinking. Still, it does not help the UK's cause that the talks over a fishing treaty collapsed a few weeks ago.

The euro is trading quietly in a narrow range, mostly between $1.2175 and $1.2205, well within the range that has prevailed over the last few sessions (~$1.2150-$1.2245). North American participants will return to their posts with the intraday technicals stretched. Look for the $1.2210-$1.2220 area to cap gains and the $1.2175-$1.2180 area to offer initial support. Sterling is a bit heavier. It was turned back before the weekend after briefly poking above $1.4200. It was the fourth time this year that sterling trading above $1.4200, but it has not closed above it once. It is approaching support found in the middle of last week near $1.4100. Later today, four BOE officials, including Governor Bailey and the outgoing chief economist Haldane testify before Parliament's Treasury Select Committee. Haldane has been a lone voice at the central bank, urging action to ensure inflation is kept in check.


For the first time since last July, speculators (non-commercials) are net short Eurodollar futures contracts, according to the latest CFTC data. The net long position has been falling since the end of March, but the reporting week ending May 18 saw the decisive move. The net position swung from long, almost 70k contracts ($1 mln notional each) to short, a little more than 247k contracts. The gross longs were shaved by 31.7k contracts, but this was no capitulation. The bulls still have 2.7 mln contracts. Rather it was the bears that pressed. Their gross short position jumped by 285.5k contracts to almost 2.9 mln. The gross short position has grown every week this year but one (mid-March).

The Chicago Fed's National Activities Index for April is due out, but it hardly a market mover even in the best of times. The report comes ahead of tomorrow's house price index, new home sales, and the Richmond Fed's manufacturing index (May). The highlight of the week comes late with the April goods trade figures (new record deficit) and the income and consumption figures. The PCE deflator is expected to jump toward 3.5% from 2.3% in March. Four Fed officials speak today, and Governor Brainard's address at the Crypto Currency Conference may draw the most interest.

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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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