Commodities Ease Though Oil Remains Firm
Today’s Highlights
• The breakdown in some commodities, including copper and lumber, appear to be weighing on the dollar-bloc currencies. Sterling is also heavy near the month’s low.
• The US 10-year yield was turned back near 1.50% yesterday and remains below there today, ahead of the full slate of US data (retail sales, industrial production, and producer prices).
• A possible problem at a China nuclear plant is being monitored. The news weighed on uranium miners yesterday.
• The US and Europe resolved the longstanding Airbus-Boeing dispute, helped perhaps by recognizing the coming challenge by China.
• While NATO recognized the growing challenge by China, Europe is more concerned about Russia. The European members of the G7 are members of the Asian Infrastructure Investment Bank, which provides financing for Belt Road projects.
The new record high in the S&P 500 and the NASDAQ’s sixth gain in seven sessions may have helped lift Asia Pacific markets today. Only China and Hong Kong did not participate. MSCI’s regional index rose for its fourth consecutive session. Europe’s Dow Jones Stoxx 600 is moving higher for the eighth session in a row. Since May 19, it has only fallen twice. US future indices are firm.
Benchmark 10-year yields are soft. The US yield briefly rose above 1.50% yesterday, but it was not sustained, and it is holding just below there now.
The US dollar is narrowly mixed against the majors. The dollar-bloc is nursing small losses, while most European currencies are posting small gains in quiet turnover. Among emerging market currencies, Asian currencies are underperforming a little, while European currencies, the Mexican peso, and South African rand have a firmer bias. The Turkish lira is off the most today, easing around 1% after falling almost 0.9% yesterday, despite a smaller than expected current account deficit. Unable to resolve the dispute at NATO, Erdogan seemed defiant. The JP Morgan Emerging Market Currency Index is lower for a third session. If sustained, it would match the longest decline in three months.
Commodities are drawing attention. Despite July WTI hovering around $71 a barrel, other commodities are weaker. Copper is off around 3.6%, which could be the biggest decline since March. Lumber fell almost 6% yesterday after falling 5.6% before the weekend. It was the eighth consecutive decline. In fact, lumber prices have risen once since May 21. Corn and wheat are trading lower. After paring losses yesterday, gold trading softly around $1864.
Marc Chandler
Managing Director
Bannockburn Global Forex
www.bannockburnglobal.com
