Morgan Stanley Coffee Report

The long awaited Fed Symposium comments from Janet Yellen were largely a confirmation of the previous endorsements of the overall health of the US economy, though as expected little clarity on timing for a hike emerged.  Coffee clearly reacted to the news, treading a familiar path alongside the DXY, and BRL specifically, for much of the remainder of the day. While the news was modest and commercial traders seemed altogether disinterested in the intraday fluctuations, the outside influence remains stark as exhibited in the graph below.  Late session defense in both markets was apparent, as robusta dropped for 3 minutes before rallying back higher for the final 3.  KC meanwhile completely disengaged from the currency trade for the last 15 minutes of the day, working its way out of negative territory and back into a positive close. KC has now ended the rout of 5 consecutive weeks of lower highs and lower lows, posting a reversal on both sides of the weekly chart.  With a range of Fed officials’ commentary now behind us, and relatively low expectations for September rate action, perhaps the market can turn focus to other topics.  However, with one more week of summer vacations ahead of the ceremonial, if not technical, start of fall in North America, it may yet be another week until focus returns.