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Oil hit by higher OPEC supply

US dollar-Swiss franc – 4hr Candlesticks
Source: GKFX / MT4 (October 1, 2020)

USD/CHF has fallen back below previous resistance, suggesting a potentially bigger down move.  Price had pulled back to 0.92 and rebounded but the upside momentum faded with a break back below the level.
 

TAKEAWAYS


•    Oil prices slide on survey showing higher OPEC output
•    Copper price dives 5%, biggest daily drop since March
•    Tokyo Stock Exchange (TSE) halts all day due to technical error
•    GBP: EU actually files lawsuit against the UK over Brexit bill
•    DAY AHEAD: Australia retail sales, Eurozone CPI, Non-farm payrolls
 

GURU WISDOM


“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” – Warren Buffett
 

MARKETS


The action was in commodity markets on Thursday in what appears to be new quarter repositioning and ongoing concerns about the global economy in light of rising virus cases and disagreement about new stimulus. Brent and WTI crude prices fell 4% before ending off the lows while copper prices tanked 5%. The dollar weakness alongside a drop in real yields saw gold jump $15 to close at $1911 per oz. 

The US dollar retreated in what has been choppy price action amid differing bets about whether Congress will agree a new stimulus package with the White House. The weakness in the greenback comes ahead of non-farm payrolls tomorrow. 

The British pound came unstuck again after the EU officially filed a lawsuit against the UK for its Internal Markets Bill, which the bloc claims reneged on the Brexit Withdrawal Agreement. There had been a belief legal action could be avoided because of fresh belief compromise could allow a deal before mid-October.

Wall Street edged out small gains having been down at one stage in response to news that House Democrats would vote on a $2.2 trillion stimulus that has no chance of passing in the Senate. European stocks finished higher with British engine-maker Rolls Royce announcing a £3 billion rights issue and German pharmaceutical company Bayer tanking 10% after results. In Asia things were quiet as stock trading in Japan shutdown and other markets were closed for holidays.
 

Copper


The 5% slide in the price of copper came just after it had touched the widely-watched $3 per lb level- in what could be a failed breakout. The push higher yesterday had been in response to better than expected Chinese manufacturing data where new orders had touched a 9-year high. On Thursday US manufacturing data missed expectations.
 

NFP Preview


Expectations are that 850,000 US jobs were added in Septemnber, down from the 1.37 million created in August. A slower pace of jobs growth is to be expected as the ecomomy gradually recovers and businesses reopen and rehire staff. However, a large miss could get investors worried about a W-shape recovery (double dip recession). 
 

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