This week in macroeconomics, US employment numbers disappointed expectations of higher growth for the third consecutive month as non-farm payrolls poster lower increments since July. The stock market ended two weeks of indecisive movement by dropping lower after the jobs report, accompanied by a backtracking US dollar, lower indices and lower crude oil pricing. For coffee pricing, the US dollar volatility in the last two trading sessions provided a bounce back from the lowest level since September 1st. Fundamentals in Brazil and technical speculation both weighed on the market in the last two weeks, with rains dispelling concerns over last month’s drought and speculators adding volatility around levels of technical interest. Despite recent volatility, C market pricing has yet to close a weekly session above $1.5155 and this week fell nearly four cents per pound. Happy Friday.
Since June 27th, the C market has maintained a range from $1.3785 to $1.5770, with only two days managing to pierce the top side resistance without closing above it. Technical supports, speculative momentum, macroeconomics and fundamentals have all contributed their share of influence, but the market happily oscillates in this twenty-cent range with no major change in the underlying supply-demand scheme strong enough to meaningfully reconfigure this setup. In the long term, the upward trend is unstopped though stalling without a significant weekly close above $1.5155 (see chart above). The weekly chart’s crowded consolidation right along the resistance level shows speculative willingness to sell anything above the level, rather than an interest in buying into the rallies. The daily chart below shows the C market rebounding from the near-term support level of $1.4540. Next week’s performance will bring either a test of the $1.4540 near-term floor or the $1.5770 ceiling.