OVERNIGHT NEWS

• US: 
• GDP came in much lower than expected at 1.2% for Q2 while the market was expecting 2.5% and was revised down for Q1 to 0.8% from 1.1%
• Inventories fell for the first time in almost five years and business investment continued to wane. The only bright spot was the 4.2% gain in household purchases in Q2
• The University of Michigan’s consumer-sentiment index dropped to 90.0 (Mkt Exp: 90.2) from 93.5 in June
• JAPAN: 
• BOJ is expecting to announce “bold “ fiscal stimulus on Tuesday but the market was disappointed by BOJ not to act on Friday except by boosting the ETF purchases. 
• SOUTH KOREA: 
• The June’s Current Account surplus widens to a record high $12.2 Bn. Trade surplus was at record high mainly due to cheaper oil prices; S. Korea imports more oil-related goods than it exports, so drop in oil prices improves balances, an official BOK member, Park said
• CHINA: 
• Chinese central bank will study ways to combine Macro Prudential Assessment with prevention of off-balance-sheet business risks as such risks have become “non-negligible”

FOREIGN EXCHANGE (INDICATIVE RATES)

Currency	Last	% Change	Overnight Range
DXY	95.66	-1.02%	95.384 - 96.62
EURUSD	1.1175	0.79%	1.1073 - 1.1197
USDJPY	102.39	-2.20%	101.97 - 105.63
AUDUSD	0.7592	1.13%	0.7493 - 0.761
GBPUSD	1.3224	0.43%	1.3152 - 1.3301

(Source: FabTrader)

Commodities (INDICATIVE RATES)

Currency	Price USD	% Change	Overnight Range
Gold	1348.15	1.02%	1328.65 - 1355.11
Silver	20.35	0.89%	19.9648 - 20.4067
Oil (BRENT)	43.29	0.14%	42.52 - 43.6
Oil (WTI)	41.36	0.83%	40.57 - 41.67

(Source: Bloomberg and Saxo)

COMMODITIES

Precious Metals: Gold futures was lifted on Friday after a report on U.S. economic growth came in weaker than expected, ending roughly 2.6% higher for the week. Notably for July, Platinum finished up over 12% for the month, while Palladium climbed 18.8%.

Oil: Oil futures rebounded from three-month low on Friday on dollar weakness, but WTI crude still logged a loss of about 5.9% for the week, and a monthly loss of 13.9%, on lingering concerns about crude and refined products oversupply. On Friday, data released by Baker Hughes showed a fifth straight weekly increase in the number of active U.S. rigs drilling for oil, rising by 3 to 374 rigs.

FOREX NEWS

• The poor GDP number pushed the DXY lower by 1% with the USD lower against all major currencies. This move was also triggered by month-end flows due to the fact that the US equity market was up 4-5% for the month of July. It will be interesting to see how the USD reacts without this month-end flows
• The biggest mover overnight was USDJPY with the disappointment from the BOJ meeting. Tomorrow will be important with the awaited fiscal stimulus and any  disappointment would push USDJPY much lower as the market is still long USD

 

Oil rises after month of steady decline but oversupply still weighs

Oil rose on Monday, driven by new orders as traders staked out positions at the start of the new month, but the market remains dogged by plentiful crude supplies, a flood of refined products, and a weakening economic outlook.

Brent crude was at $43.72 per barrel at 0440 GMT (12:40 a.m. ET), up 19 cents from its last close in July, when it lost 12 percent over the month.

U.S. West Texas intermediate was at 41.76 per barrel, up 16 cents from July's last close. WTI shed 13 percent in July.

"Oil prices rose on the day but appear vulnerable to concerns of oversupply," ANZ bank said, with traders pointing to an influx of new orders with the start of August.

Overproduction of crude and a wave of refined products were the main factors weighing on oil.

"Last week's crude build in the U.S. and the return of production in both Canada and Nigeria was a rude awakening that rebalancing (of oil markets) is probably further away than the market thought," Singapore Exchange (SGX) said.

Responding to an expected drop in demand, top exporter Saudi Arabia on Sunday slashed the September price for its light crude for Asian customers by $1.30 a barrel.

This is the largest cut in nearly a year, ahead of an expected fall in demand in October when about 1 million barrels per day (bpd) of refining capacity in Asia will be shut for maintenance.

Output from the Organization of the Petroleum Exporting Countries (OPEC) in July likely reached its highest in recent history, at 33.41 million bpd from a revised 33.31 million bpd in June.

In Libya, the state oil company said it welcomed the reopening of oil ports following a deal between the U.N.-backed government and an armed force, saying it would begin work to restart disrupted exports soon. The country is aiming to boost exports to 900,000 bpd by the end of the year.

In the United States, drillers last week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, adding three oil rigs to a total of 374.

Just as oil supplies rise, new economic concerns have emerged.

Japanese manufacturing activity shrank in July and new export orders contracted the fastest in more than 3-1/2 years, a survey showed on Monday.

In South Korea, July exports fell at the fastest pace in three months, far worse than expectations, contracting 10.2 percent on-year to $41.05 billion.

Its July crude imports fell 5.8 percent from a year earlier to 88 million barrels, official data showed on Monday.
Read More at www.reuters.com