Key Macroeconomic Indicators for Base Metal Prices (2017-8-24)

SHANGHAI, Aug. 24 (SMM) – On Thursday, eyes should be on UK’s 2Q GDP after being revised, US initial jobless claims and existing home sales for July. Market risk aversion sentiment grew after Trump’s comments on government shutdown and ending up of North American Free Trade Agreement, weighing down the dollar. The dollar is expected to keep fluctuating amid market caution. On Wednesday, SHFE base metals outperformed LME base metals, with most closing higher, except SHFE lead. On Wednesday’s night trading, aluminum and nickel led price gains of base metals. With stricter regulations, price divergence is expected to be continuing. 

SMM Price Outlook for Base Metals on SHFE (Aug. 24, 2017)

Recently, UK pound has been dragged down by disappointing data. UL’s CPI data and retail sales result after seasonal adjustment, both for July, fell from the previous level, giving no support to its currency. Meanwhile, the impact of Brexit is still being felt. UK government released a series of Brexit documents, showing its stance and suggestions, but big uncertainties are still there during the Brexit talks. If UK’s revised 2Q GDP data is lower than the previous level, UK pound will likely keep falling, and in turn this will reduce expectations over its interest rate hike in the future. 

US’s initial jobless claims in the week ending Aug. 19 are expected to grow, but to remain low as the reading is expected to be far away from 300,000. US labor market remains strong, and job growth is stable, and this will support US Federal Reserve’s proposal for balance sheet cut at its September rate meeting. 

US existing home sales, after hitting a more than 9-year’s high in May, slowed down in June due to depressed buying interest after continuous price hike from supply scarcity, which outstripped the salary growth. But, the strong labor market will lay a solid foundation for its economic growth. US’s July existing home sales are estimated to keep growing, with the result estimated at 5.55 million.