Labor Day is often cited as the end of summer and is heralded by traders as an important point in the market calendar as well. As the weather turns cooler, grilling demand for pork and beef diminishes, while natural gas heating demand picks up. In the Midwest, corn and soybean harvest is quickly swinging into full gear, which means that a massive supply of grain will soon be "in the bin." The annual commodity cycles are watched closely by many market participants, as they provide influences on the prices each year.
Energies under Pressure
Gasoline prices had been shifting higher for the last month, rising nearly 45 cents per gallon. Prices rose as uncertainty in Libya continued to endanger crude oil supplies while hurricanes in the Gulf of Mexico and Atlantic seaboard threatened to disrupt refinery operations.
However, this last week marked the end of the summer driving season and also was the peak of the hurricane season, indicating that there should be less demand and a decreased chance of supply interruption in the coming weeks. As a result, gasoline futures dropped 15 cents (-5 percent), with wholesale gasoline falling to $2.76 per gallon.
Swiss Bank Hammers Franc
The Swiss National Bank stepped into the currency market this week, announcing that it was going to take drastic measures to stop its currency from rising in value. A highly-valued franc makes vacations or Swiss-made goods too expensive for foreigners, diminishing demand and hurting the Swiss economy. Switzerland is dependent on tourism and exports, like machinery, watches, cheese and chocolate, and the last year's 50 percent rise in its currency's value has threatened those sectors.
Over the last three years, global investors have been increasingly stashing their money in Switzerland, which they view as safer than stocks or the currencies of debt-ridden governments like the United States or Europe.
To combat this money flow, the Swiss National Bank announced on Tuesday that they would sell an unlimited amount of francs in order to prevent the franc from rising in value beyond its recent high. This announcement caused a record one-day drop of over 10 cents (-8 percent), with the franc falling to $1.13 by Friday.