EUROPEAN COMMODITIES UPDATE: Contained trade after a week of USD-induced gains

Analysis details (09:45)

• A contained and catalyst-thin session thus far to conclude a busy week of macro developments before the Fed blackout begins and attention turns to the next round of Central Bank announcements. For commodities specifically, the Baker Hughes rig count looms with the only other macro driver of note being prelim. Uni. of Michigan consumer sentiment.


• As it stands, WTI Aug’23 and Brent Sep’23 are on track to conclude the week with gains of circa. USD 2.50/bbl and are currently at the upper-end of the week’s USD 72.67-77.33/bbl and USD 77.36-81.75/bbl respective parameters. Albeit, action this morning is much more modest with specific catalysts non-existent ahead of the aforementioned data points while broader action sees only fleeting upside for the USD after the index lost 100.00 on Thursday.


• Elsewhere, the key Kaub Rhine, Germany water level marker continues to drop and remains just above the 100cm point at the crossing. A level which is significantly lower than the recent historical average of +200cm for this time of year. Reminder, when the level is below 135cm the largest ships which transit the Rhine could be forced to lighten their load by around 50% of the capacity they would otherwise carry. In the near-term, the level is expected by some to continue to drop and move below the 1m mark.


• Moving to metals, spot gold is a touch softer but holds above the USD 1950/oz handle around the USD 1954/oz 50-DMA. As above, fundamental catalysts have been sparse with price action contained overall as participants digest the week’s largely disinflationary dynamics and look to upcoming Central Bank activity. Base metals are more mixed, though magnitudes not particularly pronounced, as the USD remains contained and the macro tone a tentative one. The slightly more mixed performance is perhaps a function of recent gains from the USDs relative collapse and as APAC trade was mixed amid JPY strength, for instance.

14 Jul 2023 - 09:39- Fixed IncomeResearch Sheet- Source: Newsquawk