Key Macroeconomic Indicators for Base Metal Prices (2017-2-20)

SHANGHAI, Feb. 20 (SMM) – Market players will see a light data calendar on Monday. Attention should be on Japan’s January goods trade after seasonally adjustment, annual and monthly Germany’s January PPIs, UK’s February CBI factory orders and fresh reading of eurozone’s February consumer confidence index. US’s economic data were positive and US Federal Reserve officials delivered hawkish comment. So, US dollar will advanced after a technical correction with market’s optimistic outlook, weighing down base metals. Base metals are expected to remain divergent with mixed factors.

Base Metals to Come under US Dollar Pressure, with Price Divergence Expected, SMM Says

Decline of euro slowed down after it hit the daily lowest at 1.0635. Euro drained rising strength after a 2-day rebound. Moreover, with US’s positive economic data, Fed officials’ hawkish speech and uncertainty over eurozone’s politics, euro will drop further. Market concerns on Brexit eased but UK’s economic data, such as salary and retail sales, were poor. This, together with strengthening expectation over US’s interest rate hike, will weigh down pound.

OPEC members executed output reduction well so far, especially Saudi Arabia and its allies. In the next few months, non-OPEC members will expand output reduction, especially Russia, which promised to expand reduction gradually. But, according to experience, compliance will weaken with time goes by because panics will vanish after oil prices rise. Eyes should be on compliance and US’s inventory. Oil prices will increase in a short term thanks to output reduction.