Daily Brief Macro: Global FX: Implications from FOMC and other G10 central banks and more

• Market pricing suggests nearly a 50% chance of a 50 basis point cut by the Fed, leading to uncertainty in the market.
• The direction of the Fed’s policy is clear regardless of the cut amount, with aggressive easing likely to continue throughout the year.
• Concerns about labor market weakness in Canada have prompted the Bank of Canada to shift its focus from inflation to potential weakening in economic activity.

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• Geopolitical risks are resurfacing in grain and oilseed markets
• Weather-related risks are impacting agricultural markets, particularly in the US and South America
• US grain export demand is strong, but dry conditions may lower yield potential and delay planting in South America, causing prices to rise

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• We’ve generally experienced a “softer” September than anticipated in terms of interest rates.
• The typical September issuance seasonality takes a back seat to the upcoming first Fed cut in this cycle.
• Nick Timiraos has hinted that some officials are seriously considering going big already next week, so we may be in for a ride.

• After a major dash for cash at the start of September, markets regained some optimism last week (much to my surprise, in all transparency).
• A weak USD, soft USD rates, and soaring precious metals characterized the week, especially after Mr. Fed source #1, Nick Timiraos, wrote an article suggesting that a 50bp cut is in play.
• USD weakness is something we often observe when the Fed begins cutting rates, as they are perceived to be much more reactive and aggressive than their peers.

• The JPY is knocking on a key level vs the USD
• Uncertainty over Fed interest rate decision could be a catalyst for a reversal
• Buy JPY, Gold and Gold miners on any short-term correction

• US oil and gas rig count rose by eight to 590 for the week ending 13/Sep, the first increase in five weeks and the largest weekly gain in a year.
• US oil rig count increased by five to 488 after staying flat for three straight weeks. Gas rigs rose by three to 97, marking its first increase in four weeks.
• For the week ending 13/Sep, US energy producers added three rigs each in Louisiana, Oklahoma, and Wyoming. Conversely, they cut two rigs each in California and Pennsylvania.

• The past week saw insights on Sumber Alfaria Trijaya(AMRT IJ), Indosat Tbk PT (ISAT IJ),Sai Gon Cargo Service (SCS VN), and Dyna Mac Holdings (DMHL SP).
• There were also insights on Silverlake Axis (SILV SP), Dksh Holdings Malaysia (DKSH MK), a sector insight on Malaysian Banks and CrossASEAN Ground Zero on the MR DIY Thailand IPO.
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.

• US natural gas prices inched by 1.3% for the week ending 13/Sep, as the uptrend moderated following the impact of Hurricane Francine. Production cuts lifted prices last week.   
• Henry Hub Put/Call volume ratio rose to 1.45 (13/Sep) from 1.19 the previous week as put volumes rose by 45.4% WoW, while call volumes grew by 19.2%.
• Put volume and OI surged for contracts expiring on 25/Sep, Oct, and Nov. Call OI rose for expiries on Dec, Jan, Feb, and Mar.

• Post our  initiations Southern Copper: In a League of Its Own and Teck Resources (TECK US): The New Purish Copper Play In Town, we initiate on Antofagasta PLC (ANTO LN) 
• The company provides an excellent channel check for Chile’s mining environment. It accounts for 24% of global mined production in the copper market. 
• We provide a comparison between all the mining players’ ROIC and which are the favorable names to play in the space. 

• WTI futures gained 1.45% for the week ending 13/Sep, as Hurricane Francine offset demand concerns. The smaller-than-expected build in US crude inventories aided in the rebound.
• WTI options Put/Call volume ratio increased to 1.30 (13/Sep) from 1.17 the week prior as call volume fell 36.6% WoW while put volume fell by 29.9%.
• WTI OI PCR dipped to 0.76 for the week ending 13/Sep from 0.78 on 06/Sep. Call OI rose 7.6% WoW and put OI picked up by 4.7%.