Key Macroeconomic Indicators for Base Metal Prices (2017-8-10)

SHANGHAI, Aug. 10 (SMM) – UK June industrial output, US July PPI, the number of initial jobless claims for the week ending August 5 and Fed Dudley’s statement will be eyed today. The US dollar fell from the 10-day moving average and moved in a narrow range. A wait-and-see sentiment prevailed in the market. The inflation data will greatly impact the US dollar trends. SHFE and LME base metals posted sharp gains. SHFE copper and aluminum reached a 5-year high due to capacity cuts, and fell in the evening. They may rise further.

 SMM Price Outlook for Base Metals on SHFE (Aug. 10, 2017)

UK industrial output in May fell 0.5% since concerns over Brexit hit domestic industrial output. Theresa May denied the EUR 40 billion “breakup fees” reported by media, and the amount is still uncertain. The Brexit wil continue to affect the market, and may affect UK’s industrial output in June.

The US dollar rebounded, and non-US dollar currencies fell. Markets focus on US inflation data. US July PPI is expected to rise 2.2%, and core PPI will increase 2.1%, both higher than previous annualized data. Inflation rate may improve, which may boost the US dollar.

US job market is still strong in the light of non-farm employment and JOLTS in June, which hit a record high. So, the number of initial jobless claims for the week ending August 5 will be positive.

Fed Dudley said last evening inflation will recover with labor market. If he maintains his hawkish tone, the US dollar will be bolstered and in turn weigh down gold and non-US dollar currencies, and vice versa.