This week in the global economy, Wall Street takes the spotlight in finance performance with a fourth consecutive week of gains, led by positive reports in corporate earnings. After digesting the news of Brexit, stock markets in the US, Europe and Japan are trading with more stability and the central banks of each respective economy will meet next week to determine their response in terms of policy. In coffee news, the C market spent the week under the influence of fundamental factors. Reports of cold temperatures and light frost in Brazil sparked a recovery on Monday and kept C pricing floating above the $1.45 gap established on July 11th. Today’s much-awaited news of an end to the Colombian truckers’ 46 day strike and a recovering US dollar sent futures prices stammering back down, ending the week nearly $0.05 lower from last Friday’s close. Happy Friday.
The technical picture is relatively straightforward when fundamental factors hold sway. Given the market’s near instantaneous reaction to news of frost or the reopening of a crucial supplier like Colombia, technical charting becomes accessory after the fact. On the weekly chart above, pricing shied away from the brief spurt above $1.4685 but did not test very far below the first Fibonacci level of support at $1.41. Today’s close is inches away from the near level support of $1.4145 and C pricing will have to navigate next week’s central bank decisions alongside other commodities and financial instruments, still needing a definitive close above $1.4685 to continue its upside march. Despite today’s setback, the C market remains broadly upbeat and will need to end trading below $1.3770. Since June 13th, C pricing has climbed one week only to fall the next, trading in a twenty cent range but overall losing only $0.0095 since the 13th’s close. This sort of volatility is a clear risk for anyone using differentially priced coffee, particularly as the market continues to build away from the year’s lows.