“...The US will hold off on the promised 25 per cent tariffs on China, in exchange for “not yet agreed upon, but very substantial” Chinese purchases of American agricultural products. The truce is supposed to provide 90 days worth of breathing room for the two countries to put their larger conflicts over things like IP theft, tech transfer and protectionism behind them. Any takers for a bet that it will work? I don’t think so” Rana Foroohar, Financial Times.
There is a domino reaction that is taking place although some markets are not reacting for their own individual reasons. Both RC and KC had positive openings but KC is now outpacing KC and is showing an arb value of 35.69. Of course the JanMar is contributing to the weakness with a low of -24 after closing at -19. The depth of market is surprisingly dense for this time in the morning but it is so on both the buy side and sell side.. It’s possible that Friday’s drop created some new longs, possibly option related in part. It will be important to see how the day progresses, whether we have the intense selling that we saw Friday or whether Friday was a one time event. If 8:00 doesn’t bring selling we may be able to climb back up to above 110.00, especially with some help from the Real.
As a result of the news most currencies are reacting in a positive manner as the G20 development is good for everyone. The major currencies are all higher against the $, except for the £ which has its own issues. The emerging markets are mixed. Although the USDCOP is unchanged at 3232.50, the USDMXN is 3.8270 -.0392 and the USDBRL is 3.8288 -.0379 -.90%. Bond futures are lower but steady, equities are much higher, as is crude and as are the metals. The markets directly impacted by G20, like soybeans and cotton are much higher. Sugar is higher but cocoa is lower.
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