Financial leaders at the G-20 meeting showed concerns about the fiscal cliff that would happen as soon as January 2013. Ministers from both Japan and Canada stated the issue is the most critical one in the near-term. BOJ Governor Masaaki Shirakawa warned that “If the United States fails to resolve the fiscal cliff it would hit the US economy hard as well as the world and the Japanese economy, so each G20 country will urge the United States to firmly deal with it” while Canadian Finance Minister Jim Flaherty said the fiscal cliff has carried more risks in the short-term than the sovereign debt crisis in the Eurozone.
While a final communiqué will be released after today’s meeting, a draft statement said that the global economy is facing a number of risks ahead: "Global growth remains modest and risks remain elevated, including due to possible delays in the complex implementation of recent policy announcements in Europe, a potential sharp fiscal tightening in the United States and Japan, weaker growth in some emerging markets and additional supply shocks in some commodity markets”.
On the dataflow, Australia’s retail sales rose +0.5% m/m in September, following an upwardly revised +0.3% gain a month ago. The country’s trade deficit narrowed to AUD 1.46 trillion from a downwardly revised AUD 1.88 trillion. The market had anticipated a higher deficit of AUD 1.55 trillion. The RBA meeting due on Tuesday would likely leave the policy rate unchanged at 3.25% with policymakers showing concerns of persistent strength in Australian dollar.
In the Eurozone, the Sentix investor confidence probably improved modestly to -21 in November from -22.2 a month ago. In the US, the ISM non-manufacturing index probably slipped to 54.5 in October from 55.1 in the prior month.
Commitments of Traders:
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With the exception of natural gas, speculators were bearish towards the energy complex in the week ended October 30. Net length for crude oil futures fell -16 806 contracts to 169 575 while that for heating oil slipped -782 contracts to 28 289. Net length for gasoline dropped -5 936 contracts to 63 825. Net short for natural gas slipped -10 202contracts to 49 004.
Similarly, speculators were also bearish towards precious metals during the week. Net length for gold future plunged -11 821 contracts to 170 222 while that for silver futures dropped -1 919 contracts to 36 217. For PGMs, net length for platinum slid -2 595 contracts to 41 006 while that for palladium dipped -1 598 contracts to 8 758.
Oil and Gold Reports contributed by Oil N' Gold