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Posted by Tango
on January 7, 2019, 7:11 am
The market set the morningís high after a steady opening but drifted lower on little volume showing no self propulsion and following the path of the DX. The market is again drifting lower as bids build up below the low and intensify closer to 100.00. Friday is option expiration for Feb and we could very well see a market restricted to the striking prices, more or less, or at least struggling to penetrate the strikes. Spreads are very quiet and seem to be trading as forward resting orders trade. Forward buying begins one to two cents lower from current prices across the board. The RC arb is 31.74 showing little activity in there. All major currencies are higher against the $ but emerging markets are mixed. USDMXN is 19,4094 -.0106, USDCOP is 3192.65 +1.00 and USDBRL is 3.7090 -.0064 -.17%. Bond futures are steady as are the metals. Equities are slightly lower while crude is sharply higher. All the softs are higher.
Several factors can change the marketís outlook. As mentioned by JuanV over the weekend there is the intensification of the index rebalancing, and developments in the macro environment. $ fluctuations may be more relevant than the Real itself. We also await news from Brazil on the progress of the new administration. For now we remain with fund selling at 8:00, possible index buying and commercial and others buying near the 100.00 area with activity being motivated by option expiration. Weather bugs please keep an eye on Bahia dryness.