This week in global finance, US markets posted a cautious recovery from the Brexit downturn with equities, indices and commodities showing gains at the end of trading today after news that the Bank of England could cut interest rates. US payroll reports will be issued next week and markets will look to the Fed for an indication of renewed quantitative easing. While US manufacturing and automobile sales improved, the Brexit referendum continues to cloud the global outlook. In fundamental coffee news, there is limited flow from Brazil, due to reduced exports, and from Colombia, due to a prolonged truckers’ strike. With today’s close of $1.4640, the C market is at its highest point for the year. Happy Friday.
The C market performed broadly positively in the last week, recovering quickly from the mid-range of the recent range with a steady climb establishing new highs for the year. The brisk pace seen throughout the week lost momentum nearing the highs and the relative strength index (RSI) shows close to overbought levels. Considering the COT’s report of 2,000 new longs in the speculative category, the new high could foreseeable be a point of sale for profit-taking after the long weekend. The daily chart below shows a market moving comfortably above the $1.35/lb mark since mid-June.
In mid-term fundamental expectations, Brazil expects a few more weeks of cold weather as July usually brings the lowest temperatures and Colombian authorities will need to reach a resolution to the truckers’ strike to reset the flow of internal commerce. From a technical standpoint, there is consistent firmness in the last week and the C market will need to punch above the $1.4685 to continue its ascent. The weakness in this configuration lays in the speculative position and the potential for a sell-off next week. Happy Fourth everybody.