Financial markets declined on profit-taking on Monday as investors shifted focus from Europe to US and Asian economy. The Japanese government said it unilaterally intervenes the currency market to weaken the yen. Finance Minister Jun Azumi pledged to continue intervention until he's 'satisfied'. Asian investors were also hurt as they took Chinese Premier Wen Jiabao's comments on property market seriously. Wen last week said the government would 'firmly' maintain property curbs in addition to fine-tuning other economic policies at an appropriate time. The MSCI Asia Pacific Index slipped almost -3% today.
Commodities also retreated as driven by weaker market sentiment. The front-month contract for Brent crude plunged for a second consecutive day to a 1-week low of 108.6. Price has chance to drop further as oil production in Libya slowly returns to the market after the civil war. Libya's interim government said that it plans to expand production to about 1.7M bpd within 15 months. Though the target is difficult to achieve, hopes of more oil outputs sent crude oil prices lower.
Meanwhile, Iran's Governor to OPEC Mohammad Ali Khatibi last week said oil fundamentals are just right as supply and demand is balanced. He said there's no need for an emergency meeting of the OPEC before the regular meeting to be held in December.
Market focus will be turned to the US with the 2-day FOMC meeting beginning on Tuesday. In terms of economic data, Chicago PMI due to day, manufacturing ISM due Thursday and particularly the October employment report due on Friday are critical factors determining the Fed's next step.
Commitments of Traders
With the exception of natural gas, speculators were bullish on the energy complex in the week ended October 25. Net length for crude oil futures climbed +15 347 contracts to 159 718. Net lengths for heating oil and gasoline rose +4 416 contracts to 19 145 and +8 650 contracts to 60 650, respectively, during the week. Net short for natural gas futures increased to 169 440 contracts.
Reversing the situation from the prior week, speculators were bullish on the gold and silver but bearish on PGMs. Net length for gold futures rose +2 743 contracts to 129 721 while that for silver climbed 670 contracts to 11 022. For PGMs, net lengths for platinum dipped -468 contracts to 19 712 while that for palladium futures slipped -520 contracts to 6 642.