Rouble short bets increase on growth concerns

Tuesday, September 29, 2015

After a relatively stable September the rouble seems poised for a breakout as indicated by the technicals. Having traded briefly above 70.00 against the dollar late last month some comparative stability seems to have returned to the commodity currency as crude oil prices traded sideways throughout September. However, CFTC data indicates a growing number of speculative short bets with the net non-commercial position increasing from -529 contracts during the five days to 15th September to -2,543 during the five days to 22nd September. With concerns regarding persistently weak crude oil prices and as a result Russia’s shrinking economy we could see the rouble trade back towards 70.00 and above against the dollar. Fears of a prolonged recession in Russia could prompt the central bank to cut benchmark rates further which could prompt additional weakening to the rouble.   

Embattled commodities trader Glencore saw its shares hit a fresh record low yesterday, closing over 30% lower on the day as concerns regarding its burgeoning debt pile prompted investors to sell-off en masse. It’s been a tough year for the Swiss based trading and mining group with global growth concerns, slower Chinese growth and interest rate uncertainty all contributing to the 77% price slide year-to-date. Yesterday’s sell-off was in part triggered by ongoing weakness across the base metals complex with copper in particular displaying fresh downside pressure. Three month LME copper contracts closed below $5,000/tonne as the bearish outlook in China saw the red metal extend losses for the fifth straight session. Activity early this morning has seen a continuation of downside pressure as prices trade around $4,924.50/tonne early on. We seem to be nearing the year-to-date low of $4,855/tonne which was seen in late August and any breach of this key level of support could pave the way for protracted moves on the downside.

The Bank of England is expected to hold off from an interest rate increase at least until the mid-2016 according to the Centre for Economics and Business Research. In a report published yesterday the CEBR expects policymakers to push back a rates rise to May or even August from February previously as persistently low inflation and lacklustre economic growth present significant headwinds. Ongoing weakness in emerging markets, notably China, threatens to hinder export activity and with the final GDP reading for Q2 as well as manufacturing PMI data due out this week investors will have plenty to mull over.

RUB set for a breakout as wedge pattern emerges

RUB Curncy Russian Ruble SPOT 2015 09 29 07 47 38

RUB short bets gather momentum

IMMOUNCN Index CFTC CME Russian 2015 09 29 07 47 34

Glencore shares lose 30% as turmoil continues

GLEN LN Equity Glencore PLC D 2015 09 29 07 37 38

3-M LME copper prices swing back below $5,000/tonne

LMCADS03 Comdty LME COPPER 3 2015 09 29 07 43 29

Events for today

0800

DE

Sep

CPI

1000

EZ

Sep

Bus. Climate & Cons. Sentiment

1500

US

Sep

Consumer Confidence Index

Topics: Copper, BoE, LME, RUB
More from: Kash Kamal