The dollar continues to soar, heading for a high of more than 20 years ago!
Commodities are "down you are not negotiable", international crude oil, gold, silver, base metals, agricultural products... None of them are spared!
In the currency exchange market on Monday, the dollar index rose 0.96% to 114.11, the highest in 20 years. The pound seems to have followed in the footsteps of the euro, and the exchange rate against the US dollar once fell to 1.0224, which is only a millimeter away from the 1:1 parity. On the same day, the Fed's dollar trade-weighted exchange rate index climbed to an all-time high. Non-US currencies generally fell, with the euro down 0.79% to 0.9610 against the US dollar, the pound sterling down 1.42% to 1.0690 against the US dollar, the Australian dollar down 1.15% to 0.6460 against the US dollar, and the USDJPY up 0.97% at 144.74.
In the international oil market, the news that "the EU plans to postpone the upper limit on Russian oil" once caused international oil prices to recover, but under the strong pressure of the US dollar, international oil prices fell across the board, and the US oil contract fell 3.05% in November at $76.34 / barrel; The December contract fell 2.69% at $82.74/bbl. Analysts say this is related to the return of the dollar to a two-decade high and the sluggish demand outlook due to heightened global recession concerns.
International precious metals denominated in United States dollars are not immune. On Monday, international precious metals futures generally closed lower, with COMEX gold futures down 1.59% at $1629.3/oz and COMEX silver futures down 3.01% at $18.34/oz.
Most of the base metals closed lower, with LME copper down 1.9% to $7292/mt; LME zinc fell 3.46% to $2904/mt; LME nickel fell 5.79% to $22,055/mt; LME aluminum fell 1.43% to $2134/mt; LME lead fell 2.88% to $1752/mt.
International agricultural products are also falling. On Monday, the main contract of CBOT agricultural futures closed down across the board, with soybean futures down 0.95% at 1412.25 cents / bushel; Corn futures fell 1.59% at 666 cents/bushel; Wheat futures fell 2.61% at 857.5 cents/bushel. ICE cotton futures fell 4.55 percent at 88.33 cents/lb.
Under the influence of the sharp rise in the US dollar, most US Treasury yields rose on Monday, and the three major US stock indexes closed down across the board, the Dow fell 1.11%, the S&P 500 fell 1.03%, and the Nasdaq fell 0.6%. The three major U.S. stock indexes have fallen for five consecutive days.
The pound sterling hit a record low against the dollar
According to Xinhua News Agency, affected by the British government's large-scale tax cut plan to hit market confidence, the pound against the US dollar exchange rate fell to near 1-1.03 in the early Asian trading on the 26th, setting a record for the lowest level since the British currency adopted the decimal system in 1971, and then rebounded to about 1-1.08.
British Chancellor of the Exchequer Kwassy Kwoten announced the country's largest tax cut in 50 years on the 23rd to boost the economy. On the same day, the pound fell below 1-1.09 against the dollar, the lowest level in 37 years. On the 25th, Kwoten said that the government has planned to reduce the basic tax rate of personal income tax, and more relevant measures will be introduced in the future. This statement exacerbated market panic and led to the continued decline of the pound sterling exchange rate on the 26th.
Paul Johnson, director of the British Institute of Finance, believes that the tax cut plan will significantly push up government debt while pushing up demand, which in turn will stimulate inflation to continue to climb, which is contrary to the goal of the Bank of England, the Bank of England, the Bank of England, to continue to raise interest rates to keep inflation down.
Chad Hunt, the market manager of the British interactive investment firm, said investors were worried that the tax cuts would put further pressure on the British economy. The tax cut plan, coupled with the strengthening of the US dollar, pushed the pound against the US dollar exchange rate to briefly hit a historical low on the 26th.
From April to July this year, the level of inflation in the UK set a record high in 40 years. In August, the UK consumer price index rose 9.9% year-on-year, still at a 40-year high. To curb high inflation, the Bank of England announced on September 22 that it would raise its benchmark interest rate from 1.75% to 2.25%, the seventh rate hike by the Bank of England since December.
According to CCTV news, on the 26th local time, the Bank of England issued a statement saying that it is paying close attention to the development of the financial market and will change the interest rate "without hesitation" if necessary.
Fed officials: Controlling inflation remains a top priority
Atlanta Fed President Bostik, who attended an event organized by The Washington Post on Monday, said it didn't matter when asked if he thought U.S. investors had been too optimistic about the Fed's policy before.
Bostic said Monday: "I don't know if they (investors) are too optimistic or not optimistic, and more importantly, we need to control inflation. ”
He added: "I think before this happens (inflation is under control) we will see a lot of volatility in the market in all directions. ”
On Monday, newly inaugurated Boston Fed President Susan Collins delivered her first policy speech, reiterating the oft-repeated emphasis by policymakers that cooling today's high inflation is paramount.
Collins said that while she believes the pace of price increases may have reached or is close to peak, further monetary policy tightening is needed to get inflation back to the 2 percent target.
The British government announced 92 sanctions against Russia, claiming to respond to the "referendum on joining Russia" in the four regions of Ukraine.
According to the statement released on the official website of the British government on the 26th local time, British Foreign Secretary Cranfrey announced 92 sanctions against Russia on the same day as a response to Russia's "false referendum in four regions of Ukraine".
The statement claimed that the referendum was "a clear violation of international law, including the UN Charter."
From 8 o'clock local time on the 23rd, a referendum on joining the Russian Federation officially began in Donetsk, Luhansk, Kherson and Zaporozhye regions, and the voting work will end on the 27th. The results of the referendum will be announced within 5 days. Russia's "Viewpoint" reported on the 23rd that the Poll results conducted by the All-Russian Social Public Opinion Research Center on the 22nd showed that the vast majority of respondents in the four regions who are ready to participate in the referendum support joining the Russian Federation. Among them, the Donbass region has the highest proportion of supporters, at 97%.
Russia broke out, Putin expressed condolences
According to the latest news from the Russian Television Today (RT) website, Russian satellite network and other media, on September 26, local time, the 88th school in Izhevsk, the capital of the Russian Udmurt Republic, was shot, causing 13 deaths and 21 injuries.
According to reports, Russian presidential press secretary Peskov told reporters: "Regarding the tragic news from Izhevsk, President Putin expresses his deep condolences to all those who lost their loved ones and children in this tragedy and hopes that those injured by this inhumane terrorist act will recover as soon as possible." ”
Peskov added that in the wake of this incident, it was necessary to analyze the effectiveness of measures to ensure school safety.
Local officials said the gunman was wearing a ski mask and a black T-shirt emblazoned with swastikas, RT said.
Russian lawmaker Alexander Hinshtin said the gunman was carrying two illegally modified pistols that could fire live ammunition. RT said the magazine used by the gunman had the word "hate" written on it.
TASS said the gunman's identity had been confirmed as Artyom Kazantsev, a 34-year-old local man who graduated from the 88th School. Local officials said the gunman had medical registration records with mental health problems and was currently being investigated for his adherence to neo-Nazism.
The Russian Commission of Inquiry confirmed that the shooting has killed 13 people, including 7 children, and injured 21 others, including 14 children.
The Russian Federal Security Service arrested the consul general of the Japanese Consulate General in Vladivostok
On the 26th local time, the Russian Federal Security Service arrested the consul general of the Japanese Consulate General in Vladivostok. The consul was alleged to have tried to obtain information that restricted public dissemination. The Public Relations Center of the Russian Federal Security Service said the diplomat had been declared persona non grata.
Internal divisions are severe, and the EU plans to postpone setting a cap on Russian oil
With internal divisions so deep, the EU plans to postpone setting a cap on Russian oil until a broader sanctions package is agreed.
The media on Monday, citing people familiar with the matter, reported that Cyprus and Hungary were countries that had expressed opposition to the proposal for an oil price cap. Since sanctions require unanimous consent from member states, this gives every EU country a veto.
After the price cap plan was rejected, the European Commission is now focusing on a broader sanctions package against Russia, pushing member states to reach a preliminary agreement ahead of the October 6 informal meeting of EU leaders. According to media reports, member states are now closer to supporting proposals to restrict exports of electronic components for weapons to Russia.
The EU is currently working to push ahead with a price cap on oil exports to Russia in line with the G7. G7 finance ministers have previously agreed on this price cap plan.
Crude oil broke down, the downside opened?
On Friday, WTI crude oil failed to support the $80/b mark, and on Monday, Brent crude also fell below the $85/b mark, both hitting new lows since January this year, dampening market confidence. Suppressed by the downward break of international oil prices, the crude oil system fell sharply on Monday, and the main continuous contract of SC crude oil hit a new low in the past six months during the day, falling 6.94% to close at 610.3 yuan / barrel.
Recently, international crude oil prices have continued to fall, and at present, U.S. crude oil has fallen below $80 / barrel, completely recalling all the gains since the Russian-Ukrainian conflict, similar to the price at the beginning of the year. Benefiting from exchange rate factors, the import cost of crude oil continued to rise, and the price of crude oil in the inner plate fell relatively well compared with the crude oil in the outer plate.
In fact, international oil prices have fallen 35 percent from a high of $123/b on June 14 to the current price of less than $80/bbl. In the face of the continuous decline in international oil prices, Liu Shunchang, an analyst at South China Futures, explained that the marginal impact of the supply side on crude oil has weakened, and the market focus has shifted from the previous supply side to the demand side.
"This round of oil price pullback began in June 10 the United States released a large over-expected May CPI data, inflation continued to rise to dispel the market's desire for the Fed to quickly turn to easing, and pushed the Fed to accelerate the expectation of tightening the currency, the market's concern about the recession in Europe and the United States continued to strengthen, the demand side began to become the focus of market attention, commodities including crude oil began a downward cycle. A series of weaker-than-expected economic data subsequently validated the market's concerns, and oil prices continued to fall. At the same time, gasoline consumption continued to fall short of expectations during the recent US driving season, the traditional gasoline season. Liu Shunchang said that as of September 16, U.S. gasoline demand fell to its lowest seasonal level since 1997 in 4 weeks. EIA's gasoline and diesel accumulation exceeded expectations, gasoline cracking fell sharply, and the demand side of crude oil faced a test.
In this regard, Li Yunxu, senior analyst of crude oil at SDIC Anxin Futures, also told the Futures Daily reporter that since June, the sixth round of EU sanctions against Russia has been introduced, and the EU's embargo on Russian seaborne crude oil and refined oil products will start on December 5, 2022 and February 5, 2023, respectively, and the market's expectations for the normal supply of Russian oil during the year have been further strengthened. "OPEC+ is in a steady production growth cycle, the risk of supply shortage has not become a reality, but there are signs of further promotion in the resumption of implementation negotiations of the Iranian nuclear agreement, and the marginal bearish on oil prices has been formed." Li Yunxu said that the demand side is affected by the competitive interest rate hikes of various countries, the risk of recession has increased, the US dollar index has continued to rise, making risk assets generally under pressure, and oil prices have fallen from the high oscillation.
"Since September, the supply side has been disturbed by relatively little news, and the supply expectations of Russia and Iran are still in a high degree of uncertainty and have not formed a new main line of transactions." In Li Yunxu's view, the intraday fluctuations in oil prices are highly linked to the US dollar, and the downward trend is mainly because the US dollar index continues to rise, and the market is worried about the demand outlook in the context of competitive interest rate hikes.
For the international oil price to fall again during the year, the market has long expected, but the path and timing of the decline are more worthy of deep consideration.
"In the current international environment, in addition to the confusing situation in Russia and Ukraine, the differentiation of major economies has made the market's grasp of macro policies divergent." Enron, a senior analyst at Huaan Futures, said that the core of macro analysis in the past was to pay attention to the monetary policy changes of the central bank, and now it is more necessary to pay attention to the flexible policy regulation and control of governments. The direct cause of the general decline in commodities is the recessionary pressure caused by the Fed's interest rate hike, and the decline in risk assets on Monday was triggered by the transmission effect of financial markets over several days. Judging from the recent performance of the oil market, in the context of the Fed's interest rate hike, the dollar has strengthened, and the market's concerns about the economic downturn have intensified, dragging down crude oil prices.
During the interview, the reporter learned that at present, the core logic of dominating the crude oil market is that although the market is still worried that sanctions will cause damage to Russian crude oil production and exports, considering the transshipment capacity of Russian oil to Asia, the favorable multilateral decline of sanctions on oil prices, and the market's concern about the expected recession brought about by the Fed's accelerated tightening of the currency under high inflation is increasing.
Li Yunxu believes that the futures inter-month spread is an indicator that can better reflect fundamental changes, and has not followed the weakening of oil prices recently. In the medium term, the global oil terminal demand and refinery start data are still relatively stable, this month's IEA, EIA, OPEC three major institutions monthly reports on the demand forecast for this year and next year have not made substantive adjustments, the degree of substantial impact on demand is temporarily limited. On the supply side, OPEC production increased by 618,000 b/d to 29.651 million b/d in August, of which Saudi Arabia's crude oil production in August increased by 160,000 b/d to 10.904 million b/d, and Libya's crude oil production in August increased by 426,000 b/d to 1.123 million b/d.
"According to the EU's sixth round of sanctions against Russia, the EU's embargo on Russian seaborne crude oil and refined oil products will begin on December 5, 2022 and February 5, 2023, respectively, and the main line of trading in the market in the fourth quarter of this year and the first quarter of next year will also be transferred from the previous Russian oil embargo to the actual reduction of Russian oil, and the volatility is expected to be re-amplified and the uncertainty is high." Li Yunxu said that in addition, last week, after Putin announced the partial mobilization, oil prices once soared sharply intraday, if the situation between Russia and Ukraine is further tense, Russian oil passively or actively further reduces the volume and Iran's production has not returned, the supply increase next year will be very limited. In his view, the supply and demand side does not support the continuous decline in oil prices, and the dollar is expected to rebound after the rally eases.
"For the international oil market, the changes in supply and demand are relatively limited. On the one hand, OPEC+ has not shown a positive attitude of reducing production to maintain oil prices, and the Federal Reserve's move to suppress the structural demand for crude oil through monetary policy regulation has achieved remarkable results, and the cracking spread of refined oil products has fallen rapidly; On the other hand, the hype over the European energy crisis has moderated, with the amount of energy reserves in Europe barely meeting after significantly weakening industrial demand. Enron said that the current risks affecting oil prices are mainly concentrated at the macro level, the Federal Reserve firmly stated that it will not hesitate to sacrifice the short-term economy to combat inflation, the probability of the United States raising interest rates to more than 4% this year has increased significantly, structural demand or will continue to be suppressed, and the price trend of risk assets such as crude oil is not optimistic.
"Overall, the downward trend in oil prices since June 10 is likely to continue." Liu Shunchang said that Russia's crude oil production and export resilience exceeded expectations, the European and American recession expectations strengthened, gasoline and diesel demand is weak, etc. are the main negative factors. In his view, OPEC+ cuts production and anticipation management are used to hedge against the negative impact of continued weakening on demand side on oil prices. The market needs to pay attention to when OPEC+ will start to act and the magnitude of the production cut as oil prices continue to fall. In this context, oil prices may show resistance, step-by-step gradual decline.
Fuel oil led the decline, and oiling was a collective decline
On Monday, a plunge in oil prices triggered a collective decline in oil-based products. Among them, high-sulfur fuel oil led the decline in the entire oilification system, the main continuous contract refreshed a new low in the year, a sharp drop of 7.26%, and the low-sulfur fuel oil main contract hit a new low in nearly July. In addition, the polyester plate fell as a whole ahead of coal chemicals, polyolefins and other sectors, PTA fell ahead, the main 2301 contract intraday minimum fell below the 5300 yuan / ton integer mark, the maximum decline of more than 5.7%.
The reporter learned that the crude oil end weakened under the blow of macro bearishness and demand less than expected, making the high and low sulfur fuel oil pan surface as its downstream under obvious pressure.
From the perspective of the fundamentals of fuel oil itself, high-sulfur fuel oil is facing the suppression of supply-side increments. Russian fuel shipments are expected to reach 5.18 million tonnes in September (a significant increase from last week's forecast), up 200,000 tonnes from August, according to schedule data. Against the backdrop of continued sanctions between Europe and the United States, Russia's high-sulfur fuel oil has poured into Asia. As the weather turns colder, the demand for high-sulfur fuel oil to generate electricity in the Middle East is gradually decreasing.
"At present, high-sulfur cracking is still maintained near a historical low, and this differentiation is a sequelae brought about by the structural imbalance of foreign refined oil products this year." Liu Shunchang said that since May, there has been a shortage of foreign refined oil products, cracking soaring, but Europe and Southeast Asia for the deep processing capacity of oil products is not strong, in the refinery tends to produce more refined oil at the same time, brought a large number of high-sulfur residue oil output, has been a significant inhibition of high-sulfur cracking. However, with the decline in the cracking of foreign refined oil, this phenomenon will ease, but the previously accumulated inventory will still need to be consumed for a period of time.
In Liu Shunchang's view, fuel oil compared with June to July has passed the worst point in time, the current foreign refined oil products are moving from structural imbalance to balance, foreign gasoline cracking has fallen from the historical high point to below the 5-year average, diesel cracking has also appeared significantly declined. "With the reduction of foreign refinery profits, high-sulfur supply also tends to decrease, while domestic refined oil cracking remains high, and the import demand for direct-distilled fuel oil is also growing, which is optimistic about the trend of high-sulfur cracking in the future." Liu Shunchang said.
In this regard, Li Yunxu said that from the perspective of global refinery profit level, although it has declined recently, it is still at an absolute high level in recent years, mainly affected by the decline in Russian refined oil exports, high natural gas prices and other factors, high-sulfur fuel oil as a by-product output is relatively high, while Russia, as the largest exporter of high-sulfur fuel oil, exports have not declined and a large number of flows into the Middle East and Asia, high-sulfur fuel oil continues to operate weakly.
Enron believes that high-sulfur fuel oil is affected by the continuous inflow of Russian supply into Asia, and it will still face greater supply pressure in the fourth quarter. "At present, the greater uncertainty is whether the operating rate of Russian refineries will fall with the decline in profits, thereby alleviating the pressure on the import of fuel oil in Asia." Enron said that although demand for high-sulfur marine fuel will usually pick up at the end of the year, the pressure of the recession may weigh on fuel oil demand, and the fuel oil market may continue to operate at a low level.
However, in Li Yunxu's view, the high sulfur cracking price difference is at a historic low, which has highlighted the valuation advantages of deep processing, marine desulfurization towers and other aspects, and the space for continued downward is relatively limited. "The downside of the later period mainly refers to the downward range of crude oil." He said.
It is worth mentioning that in addition to fuel oil, the sharp weakening of the PTA in the polyester plate in the oilification system on Monday has also attracted much attention.
"Since August, the PTA has fluctuated mainly at 5500 yuan / ton, and the intraday plunge has caused the price of the main PTA contract to fall below the low point of August, close to the bottom of the range in mid-to-late July." Pang Chunyan, senior analyst of SDIC Anxin Futures, said that after the centralized cancellation of warehouse receipts in September, the focus of PTA market trading shifted from the tension of recent months to the supply recovery in the fourth quarter.
According to reports, the tight supply of PX will be greatly improved with the decline in the efficiency of aromatics oil blending, aromatic products to the chemical field, PX bottleneck restrictions on PTA gradually lifted, the recent Yisheng and Fuhai Chuang devices have rebounded.
In addition, the recent market is generally concerned about the production progress of Shenghong refining and chemical integration unit, the device is equipped with PX, and in the fourth quarter, there are also the PX and PTA units of Weilian Petrochemical Production, as well as the production expectations of Jiatong Petrochemical and Hengli Petrochemical PTA devices, and the market focus turns to the future surplus. "In the context of falling oil prices, PTA leads the market, and the future downside depends on the compression of the spread between PX-naphtha and the space at the crude oil end." Pang Chunyan said.
This article is from the Futures Daily