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CN: Morning Comments
In Response To: KC RC Volatility ()

Robusta Falls Further, Macro Focus On ECB and Hurricane Irma

Belfast (CoffeeNetwork) Robusta coffee fell for a 7th straight session on Wednesday, almost touching chart support at $1,913/tonne on speculative liquidation and technical selling. The November contract settled at $1,945/tonne on Tuesday, which was $24 lower on the session. Key support is at $1,892/tonne. There is little robusta specific fundamental support given ample Vietnamese and Uganda supply. Light support comes elsewhere from the continued weakness in the US dollar.

Attention remains on the US dollar, which has continued to be under pressure on Thursday amid focus on Hurricane Irma and ahead of the European Central Bank (ECB) meeting later today.

The ECB delivers key guidance on the future direction of their monetary policy at 12:45 B.S.T. and 45 minutes later there is a press conference with ECB President Mario Draghi. The ECB is currently buying €60 billion worth of corporate and government debt but markets are expecting this to be reduced in 2018. The Euro has been bought in recent months in anticipation of the announcement, gaining 7.25% in 2017 against the Pound and 13.37% against the US Dollar. If the announcement does not satisfy expectations, there could be a notable move and volatility in the currency markets.

Asian stock markets are higher on Thursday on the heels of gains on Wall Street, given surprise news of US President Donald Trump agreeing a deal with Democrats in Congress on Wednesday to extend the US debt ceiling and provide government funding until 15 December. Support also comes from Trump's comments that he would give "great detail" in the coming two weeks on his US tax reform plan, and also from his warning that the US would no longer tolerate North Korea's actions after its 6th nuclear test, but that military force would not be his first choice.

Oil prices are under pressure from a reported recovery in Libyan output and the effects of Hurricane Harvey slowly fading. However, Hurricane Irma hit Caribbean islands overnight with wind speeds up to 185 miles per hour (295 km/h) and is heading for Florida, where fuel shortages have been reported amid panic demand from customers ahead of the storm's expected landfall this weekend.

Andrea Thompson

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