Close: London Session | Forex, Metals, Oil, Agriculture July 30, 2021

672z311_1579281304_shutterstock_434098780

Currencies

Headline inflation driven by the oil price, core inflation continues to be slow Euro-area inflation was 2.2% in July (1.9% in June). The Australian Dollar continues to hover at support-turned-resistance in the 0.7384-0.7413 area, a barrier reinforced by a falling trendline defining the down move since mid-June. The Euro-area inflation was driven by the oil price What will be the second-round effects of the (temporarily) high inflation numbers in Germany?
Core inflation declined as expected to 0.7% (0.9% in June) which indicates that more general price pressures in the Euro-area continue to be low. The Advance GDP Price Index for the quarter surged to 6.0% against the anticipated 5.4% and supported the U.S. dollar. EUR/USD price forecast remains bullish amid ongoing weakness in the U.S. dollar and the renewed strength in Euro. At 12:55 GMT, German Unemployment Change dropped to -91K against the forecasted -29K and supported the single currency Euro that pushed EUR/USD higher.
For July, the German Prelim CPI surged to 0.9% against the forecasted 0.6% and supported the single currency Euro that pushed EUR/USD higher. The dollar was little changed as dovish remarks by the U.S. Federal Reserve together with underwhelming economic data took the steam out of a month-long rally. Alongside this, since the FOMC meeting, the USD/JPY has continued to drift lower amid the pullback in the US Dollar.

Metals

Excerpts:Have high steel prices led to record prices?More than the high prices, the profit was driven by complete turnaround in our overseas subsidiaries. Like last year, steel demand increased from 12 million tonnes in June quarter to 24 MT the following quarter. The upturn in steel prices has come when doubling of its Dolvi plant to 10 MTPA is close to completion. Gold prices for the latest contract on MCX are trading down by 0.2% at Rs 48,192 per 10 grams.
The proposed solar farms will also help produce sustainable low-carbon nickel used in electric-vehicle batteries, BHP said, for which the company signed a supply agreement with Tesla last week. The gold and silver stocks have been fairly oversold, while the smaller juniors have been very oversold, so a rebound is not surprising. Turquoise Hill’s copper production from Oyu Tolgoi stood at 36,735 tonnes in the quarter, compared with 36,495 ounces last year. Bhushan Power and Steel has made a profit ₹745 crore; and ₹63 crore by Monnet Ispat.
For instance, Hyundai imports 70-80 per cent of steel required in India claiming that their parent in Korea has the patent for these products. Considering inflation risk, stock volatility, and general uncertainty around the pandemic, gold can still benefit from its safe appeal.

Oil

The main reasons behind high numbers are of course temporary: the oil price rebound, the base effect from the VAT reduction a year ago and food price volatility. The company suspended purchases early last year as the pandemic cut oil demand. Naturally, higher oil prices did not hurt and the company beat on the top and bottom line despite a continued slowdown in production. Oil is firm, and the September WTI contract is near two-week highs, around $73.50.It has gained about 2% this week, which leaves little changed on the month.
That is exactly what it will soon need, though, to prevent one of the world’s largest oil pipeline systems from sinking into melting permafrost. Inflation continues to be dominated by the oil price rebound and core inflation declined to 0.7%. Billions of dollars of oil and gas infrastructure has been built on frozen ground. Oil prices were in the red. A drought can impact oil production too. Recent wildfires, floods and droughts across the world are bringing the spotlight once again to the contribution that the oil-and-gas industry has made to climate change.

United States

The latest economic data would support the idea that inflation is running above trend, and Jay Powell indicated that inflation was above the Fed’s 2% target. More interesting, though, by the Fed waiting on the employment component of its dual mandate there is a risk that inflation rates will move up even more. The Fed’s favored inflation gauge is expected to put price growth at 3.7 percent on-year, the highest in three decades. It will be because the Fed is playing catch-up resulting in the much more aggressive monetary policy that could have been avoided had the taper come sooner.
BEFORE THE BELL Wall Street futures fell, while investors turned to a key inflation report for cues on the pace of a domestic economic recovery.
As subsequent events proved (tariffs did not reduce the trade deficit, which roughly doubled under Trump) the analysis was a surface argument by a politician following a populist agenda. Global investment flows, predominantly from EU member nations, would otherwise have gone to the US, and the US was reluctant to see its global hegemonic rival benefit from them.
Trump’s proposition was that China unfairly drove US production offshore, and that was the reason for America’s enormous trade deficit, to be corrected by imposing trade tariffs. The Fed has noted many times it would like to see a string of solid job reports. It would position the Fed with three jobs reports heading into the September meeting and four reports by October.

Europe

For example, our 4.5% growth forecast for 2021 assumes 3% q/q growth in Q3 and the ECB projection at 2.8% is not much less optimistic. The ECB considered that price stability was best maintained by aiming for a 2% inflation target over the medium term. By now, I have built up excellent skills and experience in analyzing macroeconomic and political developments in Europe, the Eurozone and Germany, including ECB watching. This was higher than in our forecast (1.5%) and the ECB staff June projections (1.4%).
Main focus: Europe, Eurozone, Germany and ECB.

0