EUROPEAN COMMODITIES UPDATE: USD’s resurgence continues to weigh, Ags. sink amid Black Sea updates

Analysis details (10:05)

• The crude benchmarks are under modest pressure given the USD recovery throughout the morning, generally softer APAC tone and a continuing deterioration to the China COVID case count weighing. In terms of fresh fundamentals, these have been very limited this morning with broader market focus on UK events for the first half of the session and then the substantial number of Central Bank speakers thereafter. With the latter in particular focus and a potential driver for the commodity space later given the possible USD readacross in wake of the narrative around the Fed and ECB’s pace of tightening seemingly coalescing around 50bp for their December gatherings.


• Currently, the benchmarks are holding around the mid-point of sub-USD 1/bbl ranges.


• Ags. have drawn much of the morning's focus following updates from the Ukrainian Infrastructure Minister that the Black Sea grain initiative will be extended for 120-days. An update which, despite an extension being regarded as likely in wake of the tone of recent rhetoric, has sparked pressure in the Ags. space with, for instance, Wheat Mar’23 futures lower by over 1.0%. Note, we haven’t seen Russia or Turkey themselves explicitly acknowledge the 120-day extension, though Russia has said the deal will not be cut off.


• Moving to metals, spot gold and silver have continued to slip from the USD and geopolitically induced upside seen in the first half of the week, with this narrative compounded by the DXY making its way convincingly back above the 106.00 mark. Currently, the yellow metal is holding around the lower-end of USD 1761-1774/oz parameters, and is thus a similar distance from the WTD peak of USD 1786/oz and the 10-DMA at USD 1738/oz.

17 Nov 2022 - 10:03- Fixed IncomeResearch Sheet- Source: Newsquawk