Japanese equities started the week in the green. Nikkei (+0.77%) and Topix (+1.01%) gained, as the USD/JPY hit 111.19.
Copper futures firmed (+2.70%), as oil bounced like a rubber ball on talks of a potential production cut from the OPEC countries at the November 30th meeting in Vienna. Nonetheless, downside risks prevail given that an agreement to cut production is certainly not in the pocket. OPEC-sceptical traders are expected to continue chasing top selling opportunities into $47.50 (Fibonacci 50% level on Oct 19th to Nov 14th decline) and $48.60 (major 61.8% retrace).
FTSE picked up some steam on the back of firmer oil and commodity prices.
Basic materials rallied (+1.57%) at the London open; Glencore (LON:GLEN) (+3.09%), Anglo American (LON:AAL) (+2.75%), Rio Tinto (LON:RIO) (+2.16%) and BHP Billiton (LON:BLT) (+2.18%).
BP (LON:BP) (+1.09%) and Royal Dutch Shell (LON:RDSa) (+1.51%)
Randgold Resources (LON:RRS) first dropped past 1.50%, then bounced by 2.60% (-1.52%), as gold recovered to $1215 per ounce. Although expectations of a Federal Reserve (Fed) rate hike triggered a decent unwind in gold allocations, rising US inflation expectations should enhance macro players’ appetite and bring them to build gold hedges into 2017.
The euro extended losses against the pound, the franc and the yen, yet recovered against the US dollar, hinting at the beginning of a short-term bullish reversal against the greenback.
German Chancellor Angela Merkel’s decision to run for a fourth term at next year’s election has certainly brought a touch of hope for stability, whereas in France, François Fillon’s victory over former president Nicolas Sarkozy at the first round of the centre-right primary election, hinted at France’s will for a fresh start in the run up to the French election.
The US dollar weakened against all of its G10 peers, except the yen. A minor correction in the greenback should encourage a short-term recovery across the board. Wednesday’s FOMC minutes are expected to trigger little enthusiasm among the Fed hawks, as a December rate hike is priced at 98%, after the FOMC Chair Janet Yellen hinted at an imminent Fed rate hike in her speech before the Joint Economic Committee last week.