MUMBAI (Sept 3): India's palm oil imports in August fell more than a quarter from a month ago on ample stocks and as negative margins prompted refiners to curtail purchases of the tropical oil, five dealers said on Tuesday.

Lower purchases by the world's biggest importer of vegetable oils could lead to higher stocks of palm oil in key producers Indonesia and Malaysia, weighing on benchmark futures.

Palm oil imports fell 27% in August from the previous month to 791,000 metric tonnes, according to estimates from dealers.

"In July, imports were substantially higher than local requirements, so refiners curtailed imports this month," said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage.

"Furthermore, after the recent price rise in palm oil, it became as expensive as soyoil, providing no incentive to purchase palm oil."

Palm oil typically trades at a discount to soft oils, but it is currently being offered at the same price as competing soft oils for September shipments.

The refining margin flipped to negative territory for palm oil in August, which prompted buyers to curtail purchases, said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.

Soyoil imports in the month jumped 16% to 456,000 metric tonnes, the highest in more than two years, dealers said.

Over the past month, local rapeseed oil prices have increased by more than 8%, which is prompting some refiners to blend rapeseed oil with comparatively cheaper soyoil, said a Jaipur-based edible oil trader.

Sunflower oil imports fell 21% in August to 288,000 metric tonnes, dealers said.

The drop in imports of palm oil and sunflower oil brought down the country's total edible oil imports by 17% to 1.53 million tonnes, as per dealers' estimates.

India is considering an increase in import taxes on vegetable oils to help protect farmers reeling from lower oilseed prices, two government sources said on Wednesday.

India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.

Industry body the Solvent Extractors' Association of India (SEA) is likely to publish its data on August imports by mid-September.

Source: The edge markets

The AUD/USD pair plunges below the crucial support of 0.6750 in Tuesday’s European session. The Aussie asset has been hit hard as the US Dollar (USD) extends its upside ahead of a slew of United States (US) economic data this week.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, inches closer to a two-week high of 102.00. Meanwhile, the market sentiment remains risk-averse as speculation for the Federal Reserve (Fed) to start reducing interest rates this month aggressively has eased. S&P 500 futures have posted significant losses in European trading hours.

Traders see a little chance that the Fed will cut interest rates by 50 basis points (bps) this month as the revised estimate for the United States (US) Q2 Gross Domestic Product (GDP) growth showed that the economy at a faster pace of 3% than flash estimates of 2.8% on an annualized basis.

For fresh cues on the Fed interest rate cut path, investors await the US Nonfarm Payrolls (NFP) data for August, which will be published on Friday. In Tuesday’s session, investors will focus on the US ISM Manufacturing PMI for August, which will be published at 14:00 GMT. Activities in the manufacturing sector are expected to have contracted at a slower pace, with the PMI coming in at 47.5 from July’s reading of 46.8.

Meanwhile, the Australian Dollar (AUD) weakens as the current market mood bodes poorly for risky assets. On the domestic front, the major trigger for the Aussie will be the Q2 GDP data, which will be published on Wednesday. The Australian economy is estimated to have expanded at a faster pace of 0.3% than 0.1% growth registered in the January-March period.

This week, investors will also focus on Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech on Thursday. Investors will look for fresh cues about whether the RBA will pivot to policy normalization this year.

Source: FXSTREET

The Pound Sterling falls to near 1.3100 against the US Dollar as the Greenback clings to gains ahead of the US ISM Manufacturing PMI for August.

US NFP data for August would be the major trigger this week.

Investors see the BoE keeping interest rates steady at 5% this month.

The Pound Sterling (GBP) exhibits a subdued performance slightly above the crucial support of 1.3100 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair edges lower as the US Dollar grips gains near an almost two-week high, with investors’ attention turning to the United States (US) Nonfarm Payrolls (NFP) data for August, releasing this Friday. 

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, consolidates near 101.70.

Investors keenly await the labor market data as it is expected to drive market speculation for the magnitude of the Federal Reserve’s (Fed) interest rate cut this month. Currently, traders are split about whether the Fed will cut interest rates gradually by 25 basis points (bps) or aggressively by 50 bps. 

The importance of the labor market data has increased significantly as comments from Fed Chair Jerome Powell at the Jackson Hole (JH) Symposium indicated that the central bank is more focused on preventing job demand, given that officials are confident about inflationary pressures remaining on track to sustainably return to bank’s target of 2%.

Investors will also get cues about the current labor market status from the US JOLTS Job Openings data for July and the ADP Employment Change data for August, which will be published on Wednesday and Thursday, respectively.

In Tuesday’s session, the US Dollar will be influenced by the S&P Global (final estimate) and ISM Manufacturing Purchasing Managers Index (PMI) data for August, which will be published in the North American session. Economists expect that activities in the manufacturing sector contracted at a slower pace, with the official PMI from the ISM coming in at 47.5 from July’s reading of 46.8.

Daily digest market movers: Pound Sterling falls despite BoE seems to be leaving interest rates steady at 5%

The Pound Sterling performs weakly against its major peers, except Asia-Pacific currencies, during the European trading hours. The British currency remains on the back foot even though the Bank of England (BoE) is expected to follow a shallow interest rate cut cycle this year compared to its peer central bankers.

Traders see little chance that the BoE will cut interest rates in September but are confident about November, Reuters reported. Market speculation for September interest rate cuts is weak as inflationary pressures in the United Kingdom (UK) are expected to remain sticky due to strong economic prospects. Also, comments from BoE Governor Andrew Bailey at the JH Symposium indicated that the central bank will be careful not to cut interest rates too quickly or by too much.

The final estimate of S&P Global/CIPS Manufacturing PMI showed on Monday that activities in the manufacturing sector in the UK expanded to a 26-month high at 52.5 in August, driven by the continuation of a strong recovery in output, new orders, and labor demand.

“The UK manufacturing sector remained a positive contributor to broader economic growth in August. The headline PMI hit a 26-month high of 52.5, reflecting solid expansions in output and new orders and the strongest jobs growth for over two years. The upturn is broad-based across manufacturing, with the investment goods sector the stand-out performer”, Rob Dobson, Director at S&P Global Market Intelligence, said.

For fresh interest rate clues, investors await BoE policymaker Sarah Breeden’s speech, which is scheduled at 12:45 GMT. Breeden was among policymakers who voted for cutting interest rates in August by 25 basis points (bps) to 5%, along with Andrew Bailey, Swati Dhingra, Dave Ramsden, and Clare Lombardelli.

Technical Analysis: Pound Sterling sees support slightly below 1.3100

The Pound Sterling declines to nearly 1.3100 against the US Dollar. The GBP/USD pair faces pressure after declining below the round-level support of 1.3200 last week. The Cable may likely find buying interest near the breakout region of a Channel chart formation on a daily timeframe.

The 14-day Relative Strength Index (RSI) declines to near 60.00 after exiting overbought conditions, signaling a lack of bullish momentum at the moment.

However, upward-sloping short-to-long-term Exponential Moving Averages (EMAs) suggest a strong bullish trend. 

If bullish momentum resumes, the Cable is expected to rise towards the psychological resistance of 1.3500 and the February 4, 2022, high of 1.3640 after breaking above a fresh two-and-a-half-year high of 1.3266. On the downside, the psychological level of 1.3000 will be the crucial support for the Pound Sterling bulls.  

Source: FXSTREET

NZD/USD may be reversing back down after a false break to the upside of a multi-month range. 

The pair is at a critical point – a close back inside the range could mark a surprise bearish turn. 

NZD/USD has reversed course after breaking out of the top of its consolidation range. It is possible the break may have been “false” and the pair will now start falling back down towards the range lows, however, it is too early to say for sure. 

Despite the current weakness, the trend remains bullish on the daily chart, and given “the trend is your friend” the odds still favor a recovery and eventual extension to higher highs. 

The break above the August 20 high on August 29 and September 3 confirmed a breakout from the multi-month range. This would normally indicate substantial probable gains on the horizon, however, price failed to extend and instead rolled over and started breaking lower. 

Assuming the correction runs out of energy the price should find a floor and start going higher again. It is eventually likely to achieve its next upside target at 0.6409, the December 2023 high. This is a conservative target for the pair. The breakout from the range actually activated another higher target that is at 0.6448, the 0.618 ratio of the height of the range extrapolated higher. 

Given the weakness currently witnessed and the possible reversal of the trend on the 4-hour Chart (not shown), however, there is a risk the breakout was false and the pair will now start declining back down within its familiar range. 

A daily close below the top of the range – that is to say below 0.6220 – would provide more confirmation of a bearish twist. The Moving Average Convergence Divergence (MACD) would also give a bearish signal if it closes below its signal line. A close below 0.6194 would provide more confidence still. 

Source: FXSTREET

Standard Chartered lowers their 2024 growth forecast to 0.0% from 0.6% on weaker H1 growth and statistical GDP revisions. Japan’s economy is likely to recover gradually, supported by domestic consumption. Standard Chartered raises their CPI forecasts on still-sticky inflation due to wage growth and reduced utility subsidies, Standard Chartered’s macro analyst Chong Hoon Park notes.

H2 to be better than H1, but not strong enough 

“We lower our 2024 GDP growth forecast to 0.0% from 0.6% on a weaker-than-expected H1 performance and likely diminished growth momentum in H2. We expect the Bank of Japan (BoJ) to maintain a hawkish policy stance due to concerns over persistent inflation and its impact on domestic consumption and investment. Consequently, we raise our CPI inflation forecast for 2024 to 2.5% from 2.4%, as inflation remains stubbornly high, driven by wage increases and the phasing out of government energy subsidies. We also revise higher our 2026 CPI inflation forecast to 2.0% from 1.8%.”

“That said, Japan's economy is gradually recovering, supported by fiscal policies and an improvement in employment and income. As a result, we revise our 2025 growth forecast to 1.3% from 1.1%. We also raise our 2026 growth forecast to 1.0% from 1.2% due to base effects.”

“Following statistical revisions to GDP data by the Cabinet Office, the BoJ revised down its growth forecast for FY24 (year ending March 2025) by 0.2ppt to 0.6% and emphasised that the revision is primarily due to changes in GDP statistics rather than a shift in the overall economic outlook.”  

Source: FXSTREET

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