US MARKET WRAP – Fed Fallout Wains As OPEC JMMC Garners Attention, With North Korean Sanctions Are Largely Ignored

The USD gave back a tiny part of its post-FOMC gains against the EUR and GBP, although the greenback continued to perform against the major commodity currencies (CAD, AUD & NZD) and held on to its gains against the traditional safe havens (CHF & JPY).

AUD was the notable underperformer on the day as RBA Governor Lowe failed to ignite any hawkish flows during a speech, providing a very balanced and measured message. The Aussie also came under pressure as iron ore futures entered a technical bear market and S&P cut China’s credit rating by one notch to A+ over rising debt fears.

GBP trickled higher in front of UK PM May’s ‘big Brexit speech’ tomorrow, with a BBC sources piece suggesting that the UK is “willing to pay EUR 20bln during a transition period, but only if the UK has access to the single market and some form of customs union.”

The two major Scandinavian currencies, the SEK and NOK, eeked out gains on the back of the Riksbank meeting minutes and rhetoric alongside the Norges Bank’s latest monetary policy decision respectively.

US stocks edged lower at the open, but managed to regain over half of their losses before dipping into the close. The S&P 500 closed down 0.30% at 2,500.61, the NASDAQ 100 closed down 0.65% at 5,934.91 and the Dow closed down 0.24% at 22,359.23.

Treasury trade was fairly lacklustre despite some early morning New York buyside flow. The Treasury curve continued to flatten, with the 5s30s spread narrowing by circa 1.5bps as CME Fed Fund futures price around a 75% chance of a Fed hike by year end. US Dec’17 10y T-note futures settled at 125.20, unchanged on the day.

Crude oil markets struggled for direction in front of tomorrow’s OPEC/non-OPEC Joint Ministerial Monitoring Committee meeting (RANsquawk preview available here). The most notable sources piece in front of tomorrow’s meeting suggested that the OPEC committee will recommend informal export monitoring, while Kuwait’s oil minister went against the grain by suggesting that the committee won't look at extension of the production cut deal this week. Russia was keen to point the finger at Nigeria, as the Russian energy minister called for a 1.8mln bpd production cap on Nigerian through Q1 of 2018, after the African oil producer cut October export loading plans for a second blend of crude. On the US refinery front Total's Port Arthur is expected to begin its restart early next week, while Andeavor’s Carson refinery hydrocracker restart is said to have failed. Exxon's Beaumont and Baytown refineries begun fuel production, while the company’s crude and refined pipelines in the Gulf and other regions of Texas have restarted. WTI crude futures settled at USD 50.55/bbl, down USD 0.14/bbl and Brent crude futures settled at USD 56.43/bbl, up USD 0.14/bbl.

21 Sep 2017 - 21:00- EnergyGeopolitical- Source: RANsquawk

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