Statistics

GOLD PRICES HOLD ABOVE LOWS, FOCUSED ON DATA

Date Aug 06 2015 09:05:55
Aug.06,2015(SHMET)--

Precious metals were mixed yesterday  with platinum lower by 0.6 percent while silver was up 0.6 percent and gold and palladium were up 0.2 percent with gold prices at $1,087. The base metals closes up an average of 0.5 percent yesterday, with all the metals firmer except tin that was off 1.8 percent. Lead jumped the most with a 2.1 percent rise and copper closed up 0.6 percent at $5,221.

 

This morning the base metals are for the most part slightly weaker with copper off 0.5 percent at $5,194.50, tin is bucking the trend with a 0.3 percent rebound, while the rest are off between 0.1 and 0.3 percent. Volume is light at 2,879 lots.

 

In Shanghai, the base metals are mixed, lead is up 1.1 percent, tin is off 0.9 percent and zinc is up 0.4 percent, while the rest are off 0.1 percent, with copper at Rmb 37,940. Spot copper in Changjiang is up 0.1 percent at Rmb 38,400-38,550, the backwardation is at an equivalent of $98 per tonne and the LME/Shanghai copper arb ratio is 7.41 for nearby dates, which means the arb window is probably just open to some traders.

 

Gold and silver are down 0.3 percent in Shanghai, steel rebar is unchanged at Rmb 2,085, while elsewhere iron ore is around $55 and Brent crude oil is around $50.40.

 

Equities in Europe and the US remained weaker yesterday with the Euro Stoxx 50 down 0.4 percent and the Dow off 0.3 percent and Asia this morning is mixed with China’s CSI 300 down two percent, while the Nikkei is up 0.6 percent, the Hang Seng is up 0.2 percent and the Kospi is up 0.1 percent.

 

Currencies – the dollar remains upbeat with the dollar index at 98.06, most lately boosted by comments from FOMC member Dennis Lockhart that he feels September will be an “appropriate time” for the Fed to raise rates. Other currencies are weaker with the euro at 1.0864, sterling at 1.5536, the yen at 124.37 and the aussie at 0.7353, after a peak of 0.7428. The rouble has strengthened from recent weakness, last at 62.53. IMF staff have reportedl. said that the IMF should put off any move to add the yuan to its currency basket until after September 2016, the IMF is scheduled to make a decision in November – the yuan is little changed at 6.2093.

 

The economic agenda is busy, the focus is on final services PMI that is out across China, Europe and the US. Data out already shows China’s Caixin Services PMI climbed to 53.8 from 51.8 – so at least China’s measures to transform the economy from an export based one to a consumer driven one seems to be making headway. In addition, there is data on Italian industrial production, EU retail sales and US data includes the ADP non-farm employment change, the trade balance and cude oil inventories – see table below for more details.

 

The precious metals are holding in low ground just above recent lows – the latest firmness in the dollar does not seem to have been a catalyst for another push lower, at least not yet. Gold prices are likely to be waiting for this week’s US jobs data, which is likely to be the next pointer as to when the Fed makes its first move. The markets therefore remain vulnerable to both the upside and downside, the path of least resistance is to the downside, but should prices find reason to rally, then the extended gross fund short position could prompt short-covering.

 

Base metals have found some lift off Monday’s lows, especially lead. The exception being tin that is seeing some consolidation after a strong rebound. The markets are therefore vulnerable as the downward trends dominate, but many metals seem oversold, especially those that are likely to see supply tighten in the months ahead, notably nickel, zinc and lead. In the short term, copper is suffering some supply disruptions, which could well provide some lift to prices, as could the open arb window between LME and Shanghai. So although we are not bullish per se, we would not be surprised to see prices get some lift that in turn could prompt short-covering.

 

 

Overnight Performance

BST 06:32:09 +/- +/- % Lots

Cu 5194.5 -26.5 -0.5% 1342

Al 1615 -1 -0.1% 133

Ni 10805 -35 -0.3% 503

Zn 1919 1 0.1% 555

Pb 1732.5 -3.5 -0.2% 336

Sn 15750 50 0.3% 10

Steel 300 0 0.0% Total

Average (BM ex-Steel) -0.1% 2879

Gold 1086.9 -0.1 0.0%

Silver 14.54 -0.01 -0.1%

Platinum 947 -6 -0.6%

Palladium 595.9 -0.1 0.0%

Average PM -0.2%

 

 

SHFE Prices 6:39 BST Change % Change

Cu 37940 -30 -0.1%

AL 12095 -15 -0.1%

Zn 14695 65 0.4%

Pb 12905 145 1.1%

Ni 80430 -70 -0.1%

Sn 107460 -940 -0.9%

Average change (base metals) 236.5 0.1%

Rebar 2085 0 0.0%

Au 218.65 -0.6 -0.3%

Ag 3197 -11 -0.3%

 

 

Economic Agenda

BST Country Data ACTUAL Expected Previous

12:01am UK BRC Shop Price Index y/y -1.4% -1.3%

2:45am China Caixin Services PMI 53.8 52.2 51.8

 8:15am Spain Spanish Services PMI 55.8 56.1

8:45am Italy Italian Services PMI 53.2 53.4

8:50am France French Final Services PMI 52.1 52

8:55am Germany German Final Services PMI 53.7 53.7

9:00am EU Final Services PMI 53.8 53.8

9:00am Italy Italian Industrial Production m/m -0.2% 0.9%

9:30am UK Services PMI 58.1 58.5

10:00am EU Retail Sales m/m -0.1% 0.2%

1:15pm US ADP Non-Farm Employment Change 216K 237K

1:30pm US Trade Balance -42.8B -41.9B

2:45pm US Final Services PMI 55.2 55.2

3:00pm US ISM Non-Manufacturing PMI 56.3 56

3:30pm US Crude Oil Inventories -1.3M -4.2M

 

Edited by SHMET

METALS MORNING VIEW – Metals under pressure amid hawkish Fed stance

Date Jul 31 2015 09:08:54
Jul.31,2015(SHMET)--

Base metals edged down yesterday after pushing noticeably higher on Tuesday, reflecting a stronger US dollar, which exerted downward pressure on the complex as well as a cautious investor sentiment ahead of the release of the July FOMC statement, which proved to be a bit less accommodative than investors had anticipated. Except for copper, which was the only base metal posting a gain, albeit modest (+0.3 percent), the rest of the complex finished lower, with zinc, down 1.2 percent, followed by lead and tin, down 0.8 percent and 0.6 percent, then nickel, down 0.4 percent, and aluminium, off 0.3 percent.

 

In contrast, precious metals were firmer, on net, posting an average gain of 0.5 percent. Taking a closer look, silver performed the most (+1.0 percent), partly reflecting short-covering due to its extreme short speculative positioning; followed by platinum (+0.5 percent), then palladium (+0.3 percent), while gold performed the worst, up only 0.2 percent. The positive market action, albeit tepid, was likely the result of a pick-up in long speculative positions in anticipation that the Fed would not likely make significant changes in its July monetary policy statement given insufficient information received since the prior FOMC meeting, in June.

 

This morning, base metals are broadly unchanged amid thin volumes, with lead and nickel, up 0.2 percent each, followed by zinc, up 0.1 percent. On the other hand, aluminium is down 0.2 percent, copper is off 0.1 percent, while lead remains flat. The precious metals complex is trading slightly lower, with gold and silver down 0.3 percent each, while platinum is up 0.4 percent, and palladium is unchanged.

 

In Shanghai, the July base metals contracts are modestly weaker, with zinc and tin leading the declines (-0.7 percent each), followed by nickel (-0.6 percent), aluminium (-0.5 percent), and copper (-0.2 percent). Lead is the only metal posting a gain this morning, albeit modest at 0.6 percent. Meanwhile, spot copper in Changjiang is down 0.8 percent at Rmb 39,300-39,550, while the backwardation with the futures is at $99.8 per tonne and the LME/Shanghai copper arb ratio is slightly up at 1 to 7.76, suggesting that the arb window is open to most traders. In the precious metals complex, silver continues to outperform gold, with the former up 0.4 percent and the latter down 0.5 percent.

 

Bonds – US government bonds sold off on Wednesday, pushing Treasury yields higher amid a risk-on environment after the central bank of China (PBOC) took a number of measures in a bid to restore stability in the Chinese equity market. Although Treasury yields pushed lower following the release of the FOMC statement (which could suggest a more dovish than anticipated statement), this counterintuitive move was eventually reversed, as evidenced by the US 10-year, which closed up 2.52 basis points (or 1.12 percent) at 2.2571 percent, and which continues to push higher this morning (+2.71 basis points or 1.19 percent), currently trading at 2.3130 percent. In fact, investors likely interpreted the latest US monetary policy statement as slightly more hawkish than expected in so far as the Fed upgraded its assessment of the US economic outlook, particularly with respect to labor market conditions. Specifically, the FOMC indicated that “the labor market continued to improve, with solid job gains and declining unemployment”, which could suggest that the Fed remains confident that economic conditions may warrant a less accommodative monetary policy as soon as September. Against this backdrop, the US 10-yiear finished the day up 2.52 basis points (or 1.12 percent) at 2.2571 percent, and continues to push higher this morning (+2.71 basis points or 1.19 percent), currently trading at 2.3130 percent. Meanwhile, European yields also moved sharply higher, with the Germany 10-year yield up 2.8 basis points (or 4.06 percent) at 0.717 percent, the France 10-year yield up 3.4 basis points (or 3.48 percent) at 1.010 percent, and the Spain 10-year yield up 4.6 basis points (or 2.41 percent) at 1.957 percent.

 

Stocks – Broad equities moved up yesterday, for the second straight day, partly reflecting an improved sentiment after the central bank of China (PBOC) managed to restore stability in Chinese equities, while US equities accelerated their gains after the release of the US monetary policy statement, as although the FOMC’s stance was a little more hawkish than expected, the Fed did not provide specific details regarding the timing of the initial rate increase, which likely provided some relief in the near term to stock investors. As such, US equities posted strong gains, with the S&P closing up 0.73 percent at 2,109 and the Dow Jones ending up 0.69 percent at 17,751. European equities also trended higher, partly boosted by positive earnings results from a number of companies, such as PSA Peugeot Citroën, with the Euro Stoxx 50 ending up 0.60 percent at 3,576.  In Asia this morning, equities are mixed. Although the Nikkei 225 is up almost 1 percent, partly reflecting a weaker yen after the release of the FOMC statement, the Hang Seng is down 0.07 percent, the CSI 300 is off 0.19 percent, while the Kospi is pushing lower (-0.85 percent).

 

Currencies – The foreign exchange value of the dollar continued to increase against the currencies of major US trading partners yesterday, as the return to a risk-on environment, in which riskier assets such as equities tend to perform well, resulted in a pick-up in euro and yen carry trade positions, pushing these so called key funding currencies lower; and therefore strengthening the greenback. The appreciation of the dollar was underpinned by the release of the FOMC statement as the Fed’s more hawkish stance likely prompted investors to continue to see the September FOMC meeting as the most likely time for the start of monetary policy normalisation, although the statement did not provide specific information on the future path of the federal funds rate (FFR). The dollar appreciated against the yen, the euro, the sterling, the Canadian dollar, the Aussie, and the yuan, but it was down against a number of emerging market (EM) currencies, including the Russian rubble, the Mexican peso, and the Brazilian real. On net, the US dollar index (DXY) closed up 0.40 percent at 97.158, but it is still down from 97.2440 at the start of the week.

 

The economic agenda is quite busy today. Economic data published earlier indicated that Japan’s prelim industrial production increased 0.8 percent month-on-month in June, above market expectations of 0.4 percent, and up from an upwardly revised -2.1-percent growth in May. Economic data published later today will include German prelim CPI for July, German unemployment for June, Spanish flash CPI and GDP for July, US goods trade balance for June, US unemployment claims for the week ending July 24, and the Q2 US GDP report, including advance GDP and advance GDP price index.

 

 

 

Although the release of the July FOMC statement resulted in a strong appreciation of the US dollar, the base metals complex held relatively well. We continue to expect base metals to strengthen further after strong losses earlier in July on the back of short-covering rather than a sustainable shift in sentiment reflecting a reassessment of the longer-term forward fundamentals. That said, the upside potential driven by short-covering should be restrained by a continuing appreciation of the foreign exchange value of the dollar.

 

In line with our expectations, the market action within the precious metals complex has been fairly positive despite the release of the less accommodative than anticipated US monetary policy statement, suggesting that the extreme short speculative positioning before the FOMC meeting elicited some short-covering activity once the FOMC statement was released. Although we acknowledge that further short-covering could continue to drive prices higher in the near term, the risks to prices are titled to the downside in the near term in so far as we believe that the Fed is progressively moving toward a hawkish stance, which will likely translate into an initial increase in the FFR at the September 2015 FOMC meeting.

 

BST       05:32     +/-   +/- %     Lots

Cu  5322      -4.5 -0.1%     1156

Al    1656      -3.5 -0.2%     337

Ni    11260    20   0.2%      627

Zn   1964.5   1.5  0.1%      212

Pb   1721      0.5  0.0%      85

Sn   16200    30   0.2%      19

Steel     300 0     0.0%      Total

      Average (BM ex-Steel)      0.0%             2,436

Gold       1093.1   -3.7 -0.3%    

Silver     14.76     -0.05      -0.3%    

Platinum       988.4     4.4  0.4%     

Palladium     620.9     -0.1 0.0%     

      Average PM       -0.1%    

 

 

SHFE Prices 5:32 BST          Change % Change

Cu  38680    -90  -0.2%

AL 12300    -60  -0.5%

Zn   14975    -105       -0.7%

Pb   13160    80   0.6%

Ni    83420    -500       -0.6%

Sn   110740  -800       -0.7%

Average change (base metals)                 -0.4%

Rebar    2092      -6    -0.3%

Au   220.75   -1.05      -0.5%

Ag   3247      14   0.4%

 

 

Economic Agenda

BST       Country Data      ACTUAL       Expected      Previous

00:50am       Japan    Prelim Industrial Production m/m   0.8%    0.4%      -2.1%

-      EU  German Prelim CPI m/m       0.2%      -0.1%

8:00am  EU  Spanish Flash CPI y/y            0.1%      0.1%

8:00am  EU  Spanish Flash GDP q/q         1.1%      0.9%

8:55am  EU  German Unemployment Change         -5K -1K

1:30pm  US  Advance GDP q/q           2.6%      -0.2%

1:30pm  US  Goods Trade Balance            -      -

1:30pm  US  Unemployment Claims          268K      255K

1:30pm  US  Advance GDP Price Index q/q      1.5%      0.0%

 

Edited by SHMET

METALS MORNING VIEW – Base metals rebound on short-covering, precious metals await FOMC statement

Date Jul 30 2015 09:13:02
Jul.30,2015(SHMET)--

Base metals rebounded quite sharply on Tuesday, partly triggered by some profit taking after speculators accumulated substantial short positions across the complex earlier in July, as reflected by the steep deterioration in the net speculative positioning, especially with respect to copper, lead, and zinc. Tin continued to be the best performing metal (+4.3 percent), followed by zinc (+2.8 percent), nickel (+2.7 percent), copper (+2.1 percent), lead (+1.8 percent), and aluminium (+1.3 percent).

 

In contrast, the precious metals complex continued to trade sideways as market participants likely were not inclined to take additional speculative positions before the conclusion of the July FOMC meeting while the renewed appreciation of the dollar likely placed downward pressure on precious metals. As such, platinum fell 0.5 percent, palladium decreased 0.3 percent, silver was down 0.2 percent, but gold finished 0.1 percent higher.

 

This morning, base metals are slightly firmer amid healthy volumes, with copper, nickel, zinc, and lead up 0.5 percent, 0.4 percent, 0.3 percent, and 0.2 percent, respectively. However, tin is down 0.4 percent while aluminium is broadly unchanged. The precious metals complex also is trading higher, with palladium and platinum up 0.9 percent and 0.8 percent, respectively, while silver is silver up 0.3 percent and gold is about flat.

 

In Shanghai, the July base metals contracts are stronger, with copper leading the rally (+2.6 percent). While zinc and lead are up 2.4 percent each, nickel and tin are up 2.2 percent and 2.1 percent, respectively. In contrast, aluminium continues to remain unchanged. Meanwhile, spot copper in Changjiang is up 2.1 percent at Rmb 39,550-39,850, while the backwardation with the futures is at $113 per tonne and the LME/Shanghai copper arb ratio is slightly down at 1 to 7.75, but still indicates that the arb window is open to most traders. The precious metals complex is marginally firmer, with silver up 0.6 percent and gold about flat.

 

Bonds – US government bonds declined slightly on Tuesday. Given that investors are placing a zero probability for the Fed to raise the federal funds rate in July, the rise in Treasury yields was unlikely due to FOMC meeting; rather, it reflected a return to a risk-on environment after Chinese equities stabilised, which prompted investors to pile back into riskier assets, such as equities and commodities.  Against this backdrop, the US 10-year yield closed up 3.24 basis points (or 1.46 percent) at 2.2499 percent.

 

Stocks – European and US equities rebounded yesterday, reversing a five-day losing streak, after the central bank of China (PBOC) indicated that it would continue to inject liquidity in a bid to stabilise the Chinese equity market, which likely tempered investor fears. Accordingly, equities in the US witnessed a relief rally, with the Dow Jones up 1.09 percent and the S&P 500 up 1.24 percent, which was also supported by better-than-expected earnings reports from large companies including UPS and Ford and by market expectations that the Fed would not start firming its monetary policy at the 28-29 July FOMC meeting. Likewise, European equities pushed solidly higher amid encouraging earnings reports underpinning investor confidence, with the Euro Stoxx 50 closing up 1.17 percent at 3,554. In Asia this morning, equities are mixed, reflecting a lack of conviction among investors due to the release of the US monetary policy statement later today. The Nikkei 225 is down 0.10 percent, partly reflecting a stronger yen, the Hang Seng is flat (up 0.05 percent), the CSI 300 is off 0.38 percent and the Kospi is trending higher (+0.57 percent).

 

Currencies – The dollar rose against most currencies yesterday, after reversing partially some losses on Monday. While the depreciation of the dollar on Monday was likely the result of carry trades unwinding due to the meltdown in Chinese equities, pushing key funding currencies such as the euro and the yen sharply up against the dollar, the recovery of the greenback yesterday likely reflected an increase in euro and yen carry trade positions amid a reduction in global risk aversion. The US dollar index (DXY) closed up 0.16 percent at 96.654, but was still down from 97.2440 on Monday.

 

The economic agenda will be dominated by the release of the July FOMC statement at 7:00pm. Economic data published earlier this morning indicated that Japan’s retail sales rose 0.9 percent in June from last year, slightly above market expectations of 0.8 percent, but sharply down from 3.0 percent in May. Economic data published later today will include GfK German consumer climate for July and US pending home sales for June.

 

 

 

Although the strengthening of prices across the base metals complex is encouraging, we hold the view that it is likely attributable to a short-term price movement fueled by short-covering rather than a shift in sentiment reflecting a reassessment of the longer-term forward fundamentals. However, base metals could continue to push higher in the short-term due to further short-covering, especially if the dollar enters a consolidation phase.

 

Given the sentiment within the precious metals complex is strongly bearish, we believe that the short-term risks are slightly skewed to the upside as the Fed is unlikely to make significant changes in its July monetary policy statement in so far as information received since the June FOMC meeting is not likely to be sufficient to prompt FOMC members to change their assessment of appropriate monetary policy. As such, precious metals could witness a relief rally amid short-covering in the short-term.

BST       05:41     +/-   +/- %     Lots

Cu  5335.5   27.5       0.5%      3516

Al    1662.5   -2    -0.1%     740

Ni    11330    50   0.4%      538

Zn   1991      5     0.3%      804

Pb   1739      4     0.2%      188

Sn   16205    -60  -0.4%     21

Steel     300 0     0.0%      Total

      Average (BM ex-Steel)      0.2%             5,807

Gold       1096.6   1.5  0.1%     

Silver     14.71     0.04       0.3%     

Platinum       986.5     7.5  0.8%     

Palladium     624.5     5.5  0.9%     

      Average PM       0.5%     

 

 

SHFE Prices 5:41 BST          Change % Change

Cu  38850    1000      2.6%

AL 12330    85   0.7%

Zn   15130    355 2.4%

Pb   13095    305 2.4%

Ni    83910    1790      2.2%

Sn   111180   2290      2.1%

Average change (base metals)                 2.1%

Rebar    2093      19   0.9%

Au   221.9     0.15       0.1%

Ag   3234      19   0.6%

 

 

Economic Agenda

BST       Country Data      ACTUAL       Expected      Previous

00:50am       Japan    Retail Sales y/y   0.9%      0.8%      3.0%

07:00am       EU  GfK German Consumer Climate         10.1       10.1

3:00pm  US  Pending Home Sales m/m           1.0%      0.9%

7:00pm  US  FOMC Statement                   

7:00pm  US  Federal Funds Rate        0.25%    0.25%

 

Edited by SHMET

METALS MORNING VIEW – Metals could become more volatile ahead of the July FOMC meeting

Date Jul 28 2015 09:24:04
Jul.28,2015(SHMET)--

Base metals were mixed on Friday amid investor uncertainty over China’s growth trajectory after the release of weaker-than-expected Chinese manufacturing data for July. Except tin, which continued to push strongly higher (+3.3 percent), zinc, nickel, and lead finished the day lower, down by 1.1 percent, 0.7 percent, and 0.5 percent, respectively. On the other hand, copper and aluminium managed to rebound from their lows, posting respective gains of 0.2 percent and 0.5 percent, after reversing sharp losses earlier in the day.

 

Precious metals remained broadly unchanged amid a volatile session. While they witnessed intense selling pressure earlier in the day on the back of a stronger US dollar, the release of weaker-than-anticipated US new home sales in the afternoon put an end to the appreciation of the greenback, which helped the complex to rebound and closed higher on average. Although silver was about unchanged (-0.1 percent), gold, platinum, and palladium were up 0.7 percent, 0.6 percent, and 0.5 percent, respectively.

 

This morning, base metals are quiet amid healthy volumes, with zinc down 0.4 percent, and, nickel and tin down 0.3 percent each. While lead is flat, copper and aluminium are posting a gain of 0.1 percent each. The precious metals complex also is mixed, posting an average gain of 0.1 percent, with palladium up 0.6 percent, silver broadly unchanged, gold off 0.1 percent, and platinum down 0.2 percent.

 

In Shanghai, the July base metals contracts are slightly weaker, with zinc leading the decline (-1.7 percent). Nickel is marginally down (-0.1 percent) but the rest of the complex is up, including tin (+0.6 percent), lead (+0.4 percent), aluminium (+0.2 percent), and copper (+0.1 percent). Meanwhile, spot copper in Changjiang is up 0.1 percent at Rmb 39,150-39,350, while the backwardation with the futures is at $106 per tonne and the LME/Shanghai copper arb ratio is at 1 to 7.30, indicating that the arb window is now closed to most traders. In the precious metals complex, silver continues to outperform gold, with the former down 0.4 percent while the latter up 0.1 percent.

 

Bonds – Government bonds continued to rally on Friday. European government bonds finished higher on Friday, pushing yields lower, in part due to the weakness in equities and disappointing readings in manufacturing and service data across the eurozone in July. The Germany 10-year yield fell 5.1 basis points (or 6.87 percent) to 0.691 percent, the France 10-year yield closed 6.1 basis points (or 5.93 percent) down at 0.967 percent, while the Spain 10-year yield dropped 4.7 basis points (or 2.41 percent) down to 1.901 percent. US government bonds also ended higher on Friday, with the US 10-year yield down 0.53 basis points (or 0.23 percent) to 2.2624 percent, as the ongoing decline across the commodity markets likely pushed inflation expectations down and thereby prompted investors to increase their exposure to bonds, which tend to perform relatively better a in a low inflation environment.

 

Stocks – Broad equities finished lower on Friday. The Euro Stoxx 50 closed 0.95 percent down at 3,600 following the release of weaker-than-anticipated eurozone manufacturing and services data in July. Similarly, US equities continued to trend lower for the fourth consecutive day on investor pessimism following mixed earning results from large companies such as Caterpillar and Freeport-McMoRan, undermining further investor sentiment, as well as the sell-off in commodity prices, which could suggest a slower global economic growth momentum. The Dow Jones ended 0.92 percent down at 17,569 while the S&P 500 closed 1.07 percent down at 2,080. In Asia this morning, equities are pushing sharply lower due to a pick-up in risk aversion amid the July FOMC meeting and weaker investor sentiment following disappointing Chinese data last week. The Nikkei 225 is 1.1 percent down, partly reflecting a stronger yen, the Hang Seng is off 2.81 percent, the CSI 300 is down 2.55 percent and the Kospi is broadly flat (-0.16 percent).

 

Currencies – The US dollar pushed higher against most currencies on Friday as investors likely continued to revised their expectations regarding the timing and speed of US monetary policy normalisation following the release of stronger-than-expected US data earlier last week. Noticeably, the US dollar appreciated strongly against emerging market (EM) currencies, mainly driven by weaker commodity prices. The greenback appreciated against the euro (EURUSD closing at 1.0977), the sterling (the cable closing at 1.5505), the New Zealand dollar (the Kiwi closing at 0.6572), and the yuan (USDCNH closing at 6.2260), but depreciated slightly against the yen (USDJPY123.769).

 

The economic agenda is relatively light today. Economic data released this morning indicated that Japan’s Services Producer Price Index (SPPI) slowed to 0.4 percent growth in June from last year, below market expectations of 0.6 percent, and below a 0.6 percent growth year-on-year in May. Economic data published later today will include German import prices for June, the German Ifo business climate for July, M3 money supply and private loans in the Euro Area (EA) for June, and US core and non-core durable goods orders for June. Importantly, the Federal Reserve indicated on Friday that staff economic forecasts (strictly confidential) were inadvertently posted on the Fed’s website on June 29. As a result, the Federal Reserve decided to make those projections more easily accessible (see here).

 

 

 

The base metals complex continues to remain vulnerable due to investor concerns on the health of the Chinese economy after manufacturing activity slowed to a 15-month low in July , especially for copper, which hit a new 2015 low last week, reflecting an upward trend in visible inventories, and for aluminium and zinc, essentially driven by technical selling. On the other hand, tin, which tends to be the most volatile base metal traded on the LME, appears to hold relatively better, which could suggest that the bottoming-out process will hold.

 

Although the sell-off in precious metals paused on Friday, we hold the view that the complex could come under renewed selling pressure this week, especially if the US dollar continues to appreciate and energy prices to drop ahead of the July FOMC meeting (July 29) in so far as the release of the monetary policy statement could include further details regarding the FOMC’s plans for policy normalisation.

Overnight Performance

 

 

 

BST

05:20

+/-

+/- %

Lots

Cu

5273.5

5.5

0.1%

3279

Al

1646

1

0.1%

218

Ni

11305

-35

-0.3%

718

Zn

1950.5

-7.5

-0.4%

914

Pb

1723

0.5

0.0%

200

Sn

15405

-40

-0.3%

16

Steel 

300

0

0.0%

Total

 

Average (BM ex-Steel)

-0.1%

       5,345

Gold

1097.3

-1.4

-0.1%

 

Silver

14.63

0

0.0%

 

Platinum

983.4

-1.6

-0.2%

 

Palladium

625.8

3.8

0.6%

 

 

Average PM

 

0.1%

 

 

SHFE Prices 5:20 BST

 

Change

% Change

Cu

38490

20

0.1%

AL 

12305

25

0.2%

Zn

14825

-255

-1.7%

Pb

12835

55

0.4%

Ni

83940

-100

-0.1%

Sn

109510

680

0.6%

Average change (base metals)

 

 

-0.1%

Rebar

2079

2.55

0.1%

Au

222

-1

-0.4%

Ag

32204

31

0.1%

 

Economic Agenda

BST

Country

Data

ACTUAL

Expected

Previous

00:50am

Japan

SPPI y/y

0.4%

0.6%

0.6%

07:00am

EU

German Import Prices m/m

 

0.2%

-0.2%

09:00am

EU

German Ifo Business Climate

 

107.6

107.4

09:00am

EU

M3 Money Supply y/y

 

5.1%

5.0%

09:00am

EU

Private Loans y/y

 

0.7%

0.5%

01:30pm

US

Core Durable Goods Orders m/m

 

0.4%

0.0%

01:30pm

US

Durable Goods Orders m/m

 

3.2%

-2.2%

 

Edited by SHMET

Gold price weak as Greek deal puts focus back on the Fed

Date Jul 15 2015 08:50:46
Jul.15,2015(SHMET)-- 

The base metals put in a relief rally yesterday on the back of an agreement between Greece and its creditors, with average gains of 1.9 percent, the PGMs were also firmer, while bullion prices were not surprisingly lower.

 

This morning the base metals prices have slipped, they are down an average of 0.6 percent, with copper off the least with a 0.2 percent drop to $5,574, while nickel and tin are down 1.0 and 1.3 percent respectively, although they were up over three percent yesterday, as was lead. Volume has been light with 3,065 lots traded.

 

Precious metals remain mixed, with platinum up 0.3 percent at $1,032.40, while palladium and silver are down 0.3 percent and the gold price is off 0.1 percent at $1,156.10.

 

In Shanghai, the base metals are up an average of 1.6 percent as Shanghai prices followed yesterday’s gains on the LME, with nickel and lead up 2.9 and 2.6 percent respectively, while zinc is up 1.8 percent, tin is up 1.3 percent, aluminium is up 0.2 percent and copper is up 0.6 percent at Rmb 40,410. Spot copper in Changjiang is also up 0.6 percent, the backwardation with the September futures is at an equivalent of $140 per tonne and the LME/Shanghai copper arb ratio is 7.40.

 

Bullion prices in Shanghai are weaker with silver down 1.3 percent and gold is off 0.6 percent.

 

Equities – The Greek deal led to a 1.8 percent rally in the Euro Stoxx 50 and the Dow closed up 1.2 percent, but Asia is mixed with China’s CSI 300 down 1.7 percent, the Hang Seng is down 0.9 percent, the Kospi down 0.1 percent but the Nikkei is up 1.3 percent, helped by a weaker yen.

 

Currencies – the dollar index (97.03) is firmer and the euro (1.0968) is weaker on the Greek deal, which suggests the market in viewing this progress as freeing up the Fed to raise rates if domestic conditions warrant it. Sterling is consolidating at 1.5460, the yen is weaker at 123.37 and the aussie is last at 0.7427, so it has not got much lift on the back of the rebound in metals. The rouble is weaker at 56.53, as is the yuan at 6.2084.

 

The economic agenda is busy today with German CPI that dropped 0.1 percent, there is a host of UK inflation data out, German and EU ZEW economic sentiment, EU industrial production and US data includes retail sales, import prices and business inventories. Speakers included Bank of England Governor Mark Carney and UK Monetary Policy Committee member David Miles – see table below for more details.

 

Gold and silver prices are weaker on the back of the Greek deal and the stronger dollar is no doubt prompting that, but prices have not sold off aggressively, which is something. The PGMs did get some lift yesterday as the outlook for industrial demand looked brighter, but at best prices seem to be consolidating. Overall it is difficult to get too excited about the precious metals as they continue to fail to get much lift. That said, we are watching the growing fund gross short positions, which may well be weighing on prices now, but at some time could prompt short-covering.

 

The base metals have rebounded in recent days on the combination of a halt in the slide in Chinese equities and on the Greek deal, but prices are now consolidating. Given how oversold prices had become, we would not be surprised to see the rallies go further and extra fuel could be added if the rallies prompt short-covering. It maybe that the markets now need to see the Greek deal ratified by the individual parliaments. Overall we would expect dips to be well supported.

 

Overnight Performance

 

 

 

 

BST

06:51

+/-

+/- %

Lots

 

Cu

5574

-9

-0.2%

1335

 

Al

1704

-4.5

-0.3%

296

 

Ni

11460

-115

-1.0%

723

 

Zn

2046

-8

-0.4%

542

 

Pb

1837

-6

-0.3%

127

 

Sn

14525

-185

-1.3%

42

 

Steel

300

0

0.0%

Total

 

 

Average (BM ex-Steel)

-0.6%

        3,065

 

Gold

1156.1

-0.9

-0.1%

 

 

Silver

15.41

-0.04

-0.3%

 

 

Platinum

1032.4

3.4

0.3%

 

 

Palladium

653.8

-2.2

-0.3%

 

 

 

Average PM

 

-0.1%

 

 

 

SHFE Prices 07:05 BST

 

Change

% Change

Cu

40410

230

0.6%

AL

12430

30

0.2%

Zn

15510

280

1.8%

Pb

13200

335

2.6%

Ni

84970

2380

2.9%

Sn

108980

1370

1.3%

Average change (base metals)

236.5

 

1.6%

Rebar

2075

5

0.2%

Au

233.65

-1.5

-0.6%

Ag

3348

-45

-1.3%

 

Economic Agenda

BST

Country

Data

ACTUAL

Expected

Previous

12:01am

UK

BRC Retail Sales Monitor y/y

1.8%

 

0.0%

 7:00am

Germany

German Final CPI m/m

-0.1%

-0.1%

-0.1%

9:30am

UK

CPI y/y

 

0.0%

0.1%

9:30am

UK

PPI Input m/m