Key Macroeconomic Indicators for Base Metal Prices (2016-5-30)-Shanghai Metals Market

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Key Macroeconomic Indicators for Base Metal Prices (2016-5-30)

Price Review & Forecast 10:10:53AM May 30, 2016 Source:SMM

SHANGHAI, May 30 (SMM) –A series of key economic data and events will come under the spotlight in the second half of this week. LME and COMEX are closed on Monday for holidays. 

US May employment data and manufacturing PMIs from major economies, in particular, will grab market attention.  

The US dollar index, instead of tumbling after worse-than-expected US April non-farm payrolls, actually kept rising over the past month due to hawkish tones from US Fed officials’ speeches and minutes of the US Fed’s policy meeting. While US economy might not be as healthy as expected, US dollar will be the preferred choice, given economic conditions in China and Europe. Head of the US Fed said on May 28 that interest rate hike will probably be appropriate in coming months, should economic data point to improvement. Her remarks sent the US dollar index up to over 95.7.   

US initial jobless claims fell back to previous lows after surging in the last week of April. Employment sub-index under ISM’s US manufacturing and non-manufacturing PMI has been rising since early this year. As such, there is little chance for May non-farm payrolls to prove disappointing again.   

China’s April official manufacturing PMI and Caixin’s April manufacturing PMI for China were both disappointing. Investment and industrial data released later also overshadowed optimism brought by large issuance of currencies. Investors should be cautious toward China’s May manufacturing PMI due for release later this week.   

Despite improving manufacturing PMI in the euro zone and core members, recovery of the euro zone is far behind that of the US. The ECB will release decision on interest rate in June on Thursday. Weak euro will leave the US dollar hovering at highs. 

The US Fed will release Beige Book on Thursday. Given current consumption and income, as well as hawkish tone in the minutes of the April meeting, there is agood chance for the US Fed to lift interest rate in June.  

Crude oil prices gained over 30% to USD 50/bbl in just half a month, despite failure to reach an agreement over production cuts among OPEC and non-OPEC countries. Market will eye crude oil output cut meeting in June. Crude oil prices are under downward pressure after big gains. While previous gains in crude oil gave little boost to base metals prices, downward pressure on crude oil will likely weigh on base metals.   

A big chance for the US dollar index to rally and pressure on crude oil for downward corrections will drag base metals down from highs later this week.  

See SMM price forecast, please click:Base Metals to Pull Back from Highs This Week, SMM Says



Key Macroeconomic Indicators for Base Metal Prices (2016-5-30)

Price Review & Forecast 10:10:53AM May 30, 2016 Source:SMM

SHANGHAI, May 30 (SMM) –A series of key economic data and events will come under the spotlight in the second half of this week. LME and COMEX are closed on Monday for holidays. 

US May employment data and manufacturing PMIs from major economies, in particular, will grab market attention.  

The US dollar index, instead of tumbling after worse-than-expected US April non-farm payrolls, actually kept rising over the past month due to hawkish tones from US Fed officials’ speeches and minutes of the US Fed’s policy meeting. While US economy might not be as healthy as expected, US dollar will be the preferred choice, given economic conditions in China and Europe. Head of the US Fed said on May 28 that interest rate hike will probably be appropriate in coming months, should economic data point to improvement. Her remarks sent the US dollar index up to over 95.7.   

US initial jobless claims fell back to previous lows after surging in the last week of April. Employment sub-index under ISM’s US manufacturing and non-manufacturing PMI has been rising since early this year. As such, there is little chance for May non-farm payrolls to prove disappointing again.   

China’s April official manufacturing PMI and Caixin’s April manufacturing PMI for China were both disappointing. Investment and industrial data released later also overshadowed optimism brought by large issuance of currencies. Investors should be cautious toward China’s May manufacturing PMI due for release later this week.   

Despite improving manufacturing PMI in the euro zone and core members, recovery of the euro zone is far behind that of the US. The ECB will release decision on interest rate in June on Thursday. Weak euro will leave the US dollar hovering at highs. 

The US Fed will release Beige Book on Thursday. Given current consumption and income, as well as hawkish tone in the minutes of the April meeting, there is agood chance for the US Fed to lift interest rate in June.  

Crude oil prices gained over 30% to USD 50/bbl in just half a month, despite failure to reach an agreement over production cuts among OPEC and non-OPEC countries. Market will eye crude oil output cut meeting in June. Crude oil prices are under downward pressure after big gains. While previous gains in crude oil gave little boost to base metals prices, downward pressure on crude oil will likely weigh on base metals.   

A big chance for the US dollar index to rally and pressure on crude oil for downward corrections will drag base metals down from highs later this week.  

See SMM price forecast, please click:Base Metals to Pull Back from Highs This Week, SMM Says