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Gold breaks $1,300 while oil’s rout gathers momentum

At the beginning of the day possibly nobody assumed so stormy start to the week. The largest moves have taken place across commodities as gold prices have pushed through $1300, the highest level since last year’s US presidential elections. A hefty increase could be attributed to weakness of the greenback which is losing ground against all its peers in the G10 basket. On the other hand, WTI oil prices have plummeted more than 3% amid growing concerns about a decline of oil demand seen in the US refineries based in Texas as the hurricane Harvey has already taken its toll.

Otherwise, wheat prices have slumped more than 1.5% following the updated forecasts from the International Grain Council. The IGC lifted its forecast for world wheat stocks to a record high as it reversed a downgrade to its global grains harvest estimate, flagging an "increasingly favorable outlook" for Black Sea output. For all declining wheat prices, both corn and soybean have proved to be quite resilient and have trodden water.

As far as currencies are concerned, the US dollar has been turned out to be a fall guy across the G10 space. The greenback has tumbled against all its peers except for the Canadian dollar and the Norwegian krone - both are down owing to dropping oil prices. Along with the falling US dollar, the EURUSD has moved closer to 1.20 handle.

Looking deeper into the G10 basket, the Swedish krone could be one of the best currency going forward amid subsiding political risks and the rosier economic outlook (higher GDP growth along with a larger budget surplus for this year). Cutting to the chase, the Sweden’s minority government chose to withdraw two contentious tax rise proposals in order to avoid no-confidence motions and get a budget bill passed before next year’s elections.

The CFTC data that is being released at the end of each trading week provides interesting view on market positioning of speculative capital. A rise in interest could benefit a given market but when positioning becomes extreme it could actually be a burden and herald a reversal (in other words: when "everyone" has invested in a given asset, how could its price go higher?). This time we take a look at two markets where positioning could potentially spark a reversal: AUDUSD and Sugar.

The cryptocurrencies market has been one of the most unpredictable among other assets and it seems that kind of theme is going to continue going forward. There were outstanding moves over the weekend both to the upside and downside as well.

Even as a start of the final week of holiday appears to be benign, things are going to evolve in the upcoming days which could significantly impact the EURUSD, possibly lifting it. Let us spell out a full tally of pivotal macroeconomic events scheduled for this week.


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