IBT: Commodities Remain Strong as Fed may Add Easing Measures
Market sentiment was not dampened by disappointing US' employment report last Friday. Rather, equities and other risky assets rallied amid speculations that the Fed will accelerate monetary easing to boost growth. Commodities remained firm in Asian session on Monday. The front-month contract for WTI crude oil price edged higher to 89.6 while the benchmark contract for gold continued trading above 1400. Asian bourses strengthened as Fed chairman Ben Bernanke said further easing is possible as employment conditions remained fragile.
According to US' Labor Department, the unemployment rate rose to a 7-month high of 9.8% in November. Non-farm payrolls only increased +39K, compared with consensus of +142K and October's upwardly revised +172K. At an interview, Bernanke said it may take 4-5 years before the unemployment rate to return to 5-6% and depending on the efficacy of the program, outlook for recovery and inflation, further bond purchases are 'certainly possible'. These comments sent the US dollar lower.
The economic calendar is light today. In the Eurozone, the Sentix Investor Confidence Index probably fell to 11 in December from 14 a month ago. In Canada, building permits might have contracted -2.5% m/m in October after gaining 15.3% in the prior month. Later in the week, the BOC, RBA, RBNZ and BOE will decide on monetary policies. We expect all to leave current interest rates unchanged but will be interested to know policymakers' views on economic outlook.
Commitments of Traders:
With the exception of natural gas, speculators were bullish on the energy complex on the week ended November 30. Net lengths for crude oil futures rose 5 448 to 146 894 contracts. Net lengths for heating oil and gasoline futures also increased, by 2 003 and 3 936, to 21 995 contracts and 71 429 contracts. Net shorts for natural gas climbed +3 071 to 170 079 contracts despite cold weather and decline in gas storage.
Speculators were bullish on gold and silver but mixed on PGMs. Net lengths for gold futures soared +6 278 to 227 607 contracts while that for silver futures added +3 608 to 34 034 contracts. For PGMs, net lengths for platinum futures fell for a 3rd week, by -275, to 21 391 contracts, the lowest level since September 2010. Net lengths for palladium futures crawled higher to 13 848 contracts.
