This week was dominated in the first part by USD weakness and a strong rally higher in Copper. Total copper stocks in warehouses monitored by the London Metal Exchange were at their lowest since 2007. This helped push copper prices over the $3/lb level. It was otherwise quiet in terms of scheduled data with the FOMC minutes from July’s meeting the main focus midweek. The minutes themselves showed that the Federal Reserve was less accommodative than the market was expecting and this resulted in some unwinding in the heavily oversold USD positioning going into the meeting. A strengthening dollar then weighed on gold, silver, and copper prices into the end of the week.

Key events from the past week

  • FOMC minutes: Fed disappoints markets, Aug 19. FOMC minutes revealed that most Fed board members were sceptical about the benefits of yield curve control. This resulted in some USD strength as the Dollar Index moved towards 93. Watch out for reactions to these market moves by Fed speakers next week.
  • GBP: Surprise CPI inflation spike, Aug 19. Rising petrol prices alongside higher contributions from clothing & footwear gave UK inflation a surprise boost in July. However, the Bank of England still projects a fall of 0.4% in headline inflation.
  • US oil: OPEC+ review, Aug 19. On Wednesday OPEC+ met to review compliance with oil cuts. OPEC+ stressed the need for better compliance from members. On the whole US crude futures remained flat after the meeting, so it will be back to the overall risk tone to determine oil’s path for next week.

Key events for the coming week

  • USD: Initial jobless claims, Aug 27. A falling US jobless claims print is important for showing early signs of a pick up in the US economy. The print is expected at 925K and any reading below 750K will be a positive surprise.
  • CAD: GDP for June, Aug 28. The Bank of Canada expected the economy to fall by -7.8% this year and a y/y contraction of 14.6% in the second quarter. Will the GDP data on Friday confirm the BoC’s bleak outlook or deliver a surprise?
  • Copper: Rallies above 2 years high, Aug 24. Copper rallied to its highest level in two years last week. The combination of a weaker dollar, low stocks, a pick up in demand and a falling output all supported copper prices. However, will we see Copper bought on dips next week?