Commodities slump as dollar rebounds

Commodities slump, tracking sell-off in yuan
Chinese demand concerns on the rise amid Covid outbreak
Dollar rebounds as terminal rate back at 5% for May through July 2023 amid hawkish Fed commentary

It has been a bad for commodities. WTI (-4.0%), silver (-2.5%) and copper (-2.0%) have all sold off, tracking the yuan lower. On Wall Street, the major indices were sharply off their earlier lows, despite the commodities sell-off and a mixed performance in Europe. It looks like sentiment has been hurt a little by a broad dollar recovery amid hawkish FedSpeak, and concerns over China’s economic health.

Hawkish Fed talk

A couple of Federal Reserve officials have again re-iterated their fight against inflation and warned of more pain to come. St. Louis Fed President James Bullard said interest rates need to rise further to a 5%-7% range. A day earlier, San Francisco Fed President Mary Daly said a pause in rate hikes was “off the table.” As a result, the market’s pricing of terminal interest rates has gone back to 5% for May through July 2023.

China worries dominate

It also looks like worries over China is one of the main focus areas right now, where Covid cases are on the rise again and investors fear more lockdowns are likely.

China reported rising daily COVID-19 infections yet again, and this seems to have hit sentiment with the yuan and Chinese stock markets falling. According to Reuters, Chinese refiners have also asked to reduce Saudi crude volume in December and also slowing Russian crude purchases. These are signs of weakness in demand from the world’s second largest economy.

WTI heading to $80?

As I wrote on WTI the day before, oil prices could be heading down to $80 amid concerns over demand.

You can read on it more HERE.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log-in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor