Chinese Currency Devaluation Slams Stocks, Boosts Commodities

Posted by Kelly Burke on Aug 12, 2015 6:35:00 PM

Line charts depicting the stock market scattered on a table

 

Stocks got hammered on Tuesday when the Chinese yuan was devalued 1.9% by the Central Bank. In a move that clearly shocked the hell out of traders - today the market tanked again when the currency was devalued another percent. Twice in two days - literally no one saw that coming. 

The move is to boost exports - reporting showed Chinese exports dropped 8%, and devaluing the yuan puts Chinese exports at a price advantage which in theory will boost them. Industrial production in China fell 6% as well, and a ramp up of exports could help boost that number as well. 

On the commodities side, high drops in inventory were predicted on the EIA's Inventory Report this morning, which initially bumped up prices. However, while we saw draws, they weren't as deep as projected, causing some of the earlier-in-the-day spikes to be backed off of. Brent reversed earlier gains to essentially trade flat, and WTI backed quickly off intraday highs. 

On the report we saw draws of 1.7 mmb on Crude (forecast was 1.9mmb), Gasoline was down 1.3mmb (1.6 forecast), and ULSD showed a build of 3mmb (600k was forecast).

At the close, WTI settled out to 43.30,  ULSD closed up .0240 to 1.5869, and RBOB closed up .0698 to 1.7635

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Topics: Chinese Currency, EIA Inventories, stock market

Seesaw action ends with mixed day, blame Chinese currency fluctuation

Posted by Mark Pszeniczny on Jun 20, 2010 9:35:00 PM

Late Sunday night I was surprised to see values up over 2 cents because after Friday’s movement I would have expected some sharp drops. That is until I saw China announced that their currency would be allowed to fluctuate against other currencies. This would/should weaken the dollar to Chinese investors thereby making Crude and its products more affordable. Thus Crude now becomes a safe haven against a falling dollar for other investors, pushing values higher. Additionally, all goods become cheaper to China spurring US manufacturing rates and another economic boom is on the horizon! That was 7pm last night, as of 3pm today, eh … not so much. Profit taking ensued pealing values all the way back to zero and RBOB actually finished negative on the day, down .0048 to $2.1428, HEAT stayed positive closing at +.0170 to $2.1459. CRUDE mustered up enough strength to close up .64 to $77.82. I wish I can say this is the last of the recent rally, but that can only be determined after a few mixed sessions like we saw today. With month end and quarter end quickly approaching, expect some more downside as the big guys looks to book profits.

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Topics: Dollar falls, The Market, NYMEX, Profit taking, Chinese Currency

NYMEX waivers ahead of Inventories

Posted by Mark Pszeniczny on Jun 8, 2010 9:34:00 PM

We had anticipated some sideways action over the next few sessions as traders decide which bandwagon to jump on. Nothing was more evident than today that saw thin news have short, sharp impacts on the trade. After a moderately low start, both products were down over a penny, news of a Natural gas pipeline explosion boosted values until mid morning as FED chairman Bernanke spoke on how the economic recovery is ongoing, we probably wont “feel” it for sometime. As what has been the theme for going on several weeks, the uncertainty around the health of the economy will slosh around the trade until we have defining technical or fundamental reasons to move in either direction. Looking out further, with the Chinese government intentionally slowing their economy to curb massive inflation concerns, it may have longer consequences on the US. With estimates of inventories being mixed, don’t expect any clearer view of direction in Wednesday’s session. At the close, Crude added .55 to $71.99, RBOB fell .0058 to $1.9891 and HEAT managed to edge out a loss of .0030 to $1.9653.

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Topics: Natural Gas Pipeline Explosion, Bernanke, The Market, NYMEX, Chinese Currency

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