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All Eyes on the Dollar?

As a new week begins, the pace of commodities-focused news appears to have slowed considerably with all eyes now on a midweek announcement from the Fed. A large rise in interest rates will increase the strength of the USD and have an impact on food, energy and metals prices. Yet, the volatility in commodity markets is behind a liquidity squeeze and low trading volumes as a result. Additionally, the EU has still to agree its plans for energy this winter and Bloomberg reports that “the Czech Republic, which holds the EU’s rotating presidency, has called an urgent meeting of energy ministers for Sept. 30, with the goal of clinching a bloc-wide crisis plan before the winter heating season starts. That means the final shape of proposals could take shape in the coming week: on market interventions, demand management or help to consumers.” So there will be much to comment on in the coming days it seems including proposals by the European Commission that includes “raising the clearing threshold for commodities and other derivatives to 4 billion euros ($4 billion) and allowing bank guarantees to be accepted as collateral against margin calls, according to a policy document. The European Securities and Markets Authority has until September 22 to respond to the proposals, the document states. ESMA said Tuesday it was considering measures, including circuit-breakers, to limit stress in the energy market,” according to Bloomberg.

Meanwhile, almost all CTRM and related software vendors are reporting very active markets and lots of activity. Announcements remain slow but this remains a feature of CTRM software markets – that customers are often reluctant to be make public announcements. With much focus on risks and liquidity, we can probably expect interest in software to remain strong through at least the rest of this year.

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