Hurricane China Watch

22:40- Commodity Update

WTI CL- November ‘Crude oil rose, recouping part of the biggest loss in eight months, as China’s interest rate increase added to signs of economic growth and analysts forecast a decline in U.S. fuel stockpiles. Futures gained as much as 0.4 percent after dropping 4.3 percent yesterday, the biggest decline since Feb. 4.’

November Crude trades at $79.90/b up $0.30. December Crude trades at $80.50/b up .37%. Globex shows December contract volume of 4.8k. Due to impending expiration on Wednesday, November crude only traded 481 contracts as of writing.

‘The Energy Department report today may show U.S. gasoline inventories fell 1.5 million barrels, according to the median of 16 analyst estimates in the Bloomberg News survey.’ (Bloomberg.com)

Natural Gas- NG contracts expiring on October 27 continue to pick up traction from yesterday’s session in which prices rallied more than 2%. The front month contract is up by .51% to 3.538.

GC- Gold was crushed in yesterday’s session and traded down by $40 on December contracts. The precious metal is up by $3.50 to 1337.10/Toz.

Copper- After trading down to 3.7250 throughout the NYMEX session, HG gained some traction during Globex trading. The Red base metal December contract is up by .94% to 3.7655.

22:30- FX Commentary

EUR/USD- The Euro has weakened a bit since the blood bath, across all asset classes, at the close of NY trading. The pair traded as low as 1.3700 @ 20:00. The slight breach of 1.37 triggered heavy buying up to 1.3750. Since then the pair has bounced and now trades higher by 58 pips from the lows to 1.3758. The pair is up 34 pips on the session.

USD/CHF- The ‘Swissy’ traded down to .9680 at 21:50 from session highs of .97185 at 20:00.  The pair is weaker by 32.5 pips on the session and was last quoted at .9686.

AUD/USD- Watching this pair is almost as much fun if not more fun than the viewing the  EUR/USD trade.  The Aussie dropped to .9665 at 20:00 and paired all losses to touch a session high of.9742 at 21:45.  The pair now trades at .97375.

Trading Economics

Many Commodity traders who held Net long positions may have been caught off-guard when The People's Bank of China explicitly announced hawkish monetary policy in order to curb inflation:

"China's benchmark rates are not an overnight lending rate as is the case in the United States and other major western economies. Instead, it has a one-year interest rate on saving deposits, which increased to 2.5% and a one-year interest rate on loans, which rose to 5.56%." (CNNMoney.com)

GDP, CPI, PPI, Retail Sales, and Industrial Production data are to be released tomorrow evening.  Economists expect the Chinese economy grew by 9.5% yoy in the third quarter of 2010.  Any growth figures over 10% ought to unleash the commodity bulls from the proverbial cage they were placed in today.

-Patrick M. Ambrus

Sources: Bloomberg.com, Economy.com, listown.com, CNNMoney.com