Key Macroeconomic Indicators for Base Metal Prices (2016-8-8)

SHANGHAI, Aug. 8 (SMM) – Fierce struggles will be expected between shorts and longs on base metal market on Monday with focus on economic figures from China.

Base Metals to Seek Price Direction, SMM Says 

Two manufacturing PMIs from China showed mixed trend in July, triggering caution in market. Economic figures for Q1 were upbeat but not for those in Q2, which adds uncertainties about whether Chinese economy is consolidating at bottom.

Chinese yuan started appreciating in late July, which however, limitedly boosted export. The production and new order sub-indexes diverged in July and the export date due for release this week will prove which PMI is more in line with economic situation.

The inflation data from China will come under spotlight on Tuesday. As widely known, M1 and M2 supply diverge from each other. As such, the performance of inflation will not serve as a key measure of further looseness in China.

China’s fixed asset investment and investment in property market will be due for release this week. It already forms a trend that government investment posts gains while private investment registers losses. The housing sales and housing starts will play a more important role. Should the figure turn out to be negative, domestic economy will take a hit.

US nonfarm payrolls were 255,000 in July, below June’s level but above forecast and whether this will make US Fed normalize its rate at the end of 2016 is uncertain. US dollar extended gains last Friday but longs suffered heavy pressure. The bets for a rate hike in September are far below those in December.