Archives of “October 2020” month

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Hurricane Zeta grows into category 2 storm as it nears gulf coast

  
  Analysis

Storm to weaken slightly as it makes landfall near New Orleans

Hurricane Zeta
Zeta is forecast to strengthen for a few more hours before slowing down in the cooler waters in the northern gulf.
“Even if a little weakening begins later today, however, Zeta should maintain hurricane strength through landfall,” the NHC said.
The good news is that this is a fast-moving hurricane and that should limit the storm surge.
From here, the range of possible outcomes is fairly narrow so I don’t see any particular market risks.

German DAX falls over 4.4% and leads the spiral and European indices

  
Analysis, Global Indices

Covid cases soaring and restrictions are being put in place

The major European stock indices spiraled to the downside today as Covid cases are soaring and restrictions are being implemented. The provisional closes are showing:

  • German DAX, -4.42%
  • France’s CAC, -3.69%
  • UK’s FTSE 100, -2.84%
  • Spain’s Ibex, -2.5%
  • Italy’s FTSE MIB, -3.6%
German’s Merkel is just out saying the speed of the virus is spread is especially high, and we are seeing exponential growth. She adds:
  • numbers in intensive care units have doubled over the past 10 days
  • in many areas we are no longer able to track and trace because of capacity limits
  • curve must be flattened again
In the European debt market, the benchmark 10 year yields were mixed with investors moving into German and UK debt but shunning Spain, Italy and Portugal.
European tenure debtA look at other markets as London/European traders look to exit shows:
  • spot gold is tumbling $26.68 or -1.4% at $1881.33. The precious metal is following the flows into the US dollar
  • spot silver is down $0.97 or -3.99% at $23.39
  • WTI crude oil futures are down $2.40 or -6.04% at $37.19. The low for the day reached $37.04. That is just above the 38.2% retracement of the move up from the April low which comes in at $37.06, and the low from September at $36.93.
In the US equity market, the major indices are down around 3% but off there lows:
  • S&P index -98.89 points or -2.92% at 3291.70. The low price reached 3284.51. The prices below its 100 day moving average at 3306.27
  • NASDAQ index is down 351 points or -3.07% at 11080.92. It’s low reached 11064.27
  • Dow industrial average is down 800 points or -2.9% at 26665. The low price reached 26579.14
In the US debt market yields are little changed despite the sharp move to the downside in equities.
US yields are marginally lower

EURCHF stumbles lower to 200 day MA and finds buyers

  
Analysis, Forex

200 day MA at 1.06736 stalls the fall.

The EURCHF stumbled lower on the overall EUR selling and in the process moved to the lowest level since July 14. The low price reached 1.06756. That was just above the 200 day moving average at 1.06736.
200 day MA at 1.06736 stalls the fall.
Buyers lean against the moving average level and have pushed the price back up toward the 1.0700 level. The current price is trading at 1.0690.
Drilling to the hourly chart below, the price yesterday moved above its 100 day moving average at 1.07373, but stalled near a swing area between 1.07457 and 1.07481 (see red numbered circles).
The move back below the 100 day moving average, turned buyers to sellers. The price settled near the 100 and 200 hour moving averages near the end of day.
Today, after a initial moved to the downside in the Asian session, the price corrected up to retest the 100 and 200 hour moving averages. Sellers leaned against level and push the price back down in the European session. The run made to just short of the 200 day moving average.
EURCHF on the hourly chart
So buyers leaned at support and that supported so far held. If the price is to head back higher, reward the dip buyers, and tilt the bias more to the upside getting back above the low from last Friday near the 1.0701 level, and the earlier swing low today would be eyed. Failure to get above that level and the sellers may make another run toward its 200 day moving average.

EU’s von der Leyen: Coronavirus cases will increase in the next 2-3 weeks

  
Analysis, COVID-19

Comments by European Commission president, Ursula von der Leyen

  • Urges governments to step up response to the pandemic
  • Spike in virus infections is ‘alarming’
  • Now is not the time to relax virus measures
Given how things have progressed, it is a fair assumption to say that the virus situation will remain rather serious throughout Europe during the winter.
There may be tighter restrictions being introduced now but it comes as a time when the second wave has already far outpaced the first wave of infections.
A likely scenario to consider is that if virus cases start to fall again and restrictions are eased, we could fall back into the same stop-start motion some time next year.

European equities open lower to start the day

  
Analysis, Global Indices

The anticipation of Germany, France shutdowns weigh on the mood

  • Eurostoxx -1.4%
  • Germany DAX -2.2%
  • France CAC 40 -2.0%
  • UK FTSE -1.2%
  • Spain IBEX -1.4%
The softer risk mood is starting to be reflected more in the FX space, with EUR/USD easing to a session low of 1.1760 and GBP/USD also down to 1.3020 nearing a test of its 200-hour moving average currently.
From a technical perspective, the drop in European equities is looking quite ugly with the DAX now falling past its 25 June low upon a break below the 200-day moving average:

Funds bet on OPEC+ extending cuts Wed 28 Oct 2020 07:11:04 GMT

  
Analysis, Crude

Via Reuters

Via Reuters 

Hedge fund are reported to have purchased crude futures and options at the fastest rate for six months as portfolio managers grow in confidence that OPEC+ will delay their scheduled output increases until demand is stronger. Net position on crude has increased over the two most recent weeks to 464 million barrels rising from a low of 380 million on October 06. The net position is now in the 44th percentile for all weeks since the start of 2010 up from the 26th percentile on October 06.

What’s the trigger for this

Well, it is rising COVID-19 cases hitting oil demand. Yesterday, OPEC’s chief said that rising infections may delay oil’s recovery. The funds are getting one step ahead expecting OPEC+ to delay cuts to support oil prices. As things currently stand OPEC+ is scheduled to increase production by almost 2 million barrels per day in January.

When might they do this?

The JMMC meeting is due November 17 and OPEC+ are due to meet in November 30/December 01. So, a buy in oil could make sense for some traders in the run up to the meeting. Certainly after the US elections, as the risk is that the USD takes a bull run on a surprise Trump victory. However, a Trump victory is the outlier result.

Norway’s oil & gas exploration has dropped around 50% this year

  
Analysis, Crude

I should clarify … the number of exploration wells drilled in 2020 is projected at 30, from 57 last year.

  • That’s according to the Norwegian Petroleum Directorate (NPD).
Reuters carried the info on Tuesday ICYMI, link here.
NPD citing the usual reasons:
  • decline in demand for oil
  • lower prices
have led oil companies to reduce their exploration budgets for the year and postpone a number of exploration wells
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