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4 Jul 2014
Commodities reaction to strong NFP muted - TD Securities
FXStreet (Łódź) - Mike Dragosits, Senior Commodity Strategist at TD Securities, points out that yesterday'sstronger than expected NFP print failed to influence commodities in the way one would have expected judging by the outcome.
Key quotes
"In the gold market, prices reacted negatively to another all-around strong payrolls report, but once prices started to near the lows of the recent range, buyers reappeared to keep the yellow metal from breaking lower. It seems that traders are waiting to see how the Fed reacts to this onslaught of positive data that continues to appear in the US and whether it will continue as such."
"Base metals reacted to the outcome of a much stronger payrolls picture by rising promptly after the release. However, yesterday's ADP payrolls foreshadowing, and subsequent heavy rally in the base metals, left little room for additional firepower today."
"Clearly, the bias had already shifted to the upside ahead of nonfarm payrolls. In general, we expect this direction for base metals will continue, with both the US and China now firing on a majority of their cylinders."
"Demand expectations will continue to remain firmly on the growth side, and those metals with mine supply side issues will benefit most. Namely, zinc and lead."
"The oil market reaction to the positive US surprise, which is demand positive for oil, was somewhat muted. The reason for this is related more so to the geopolitical developments and risk premium that has been built into the price over the past few months."
"However, concerns seem to be subsiding on multiple fronts, Russian/Ukraine tensions easing, the Libyan rebel's agreement to reopen oil export ports, and US military 'advisors' on in the ground in Iraq, along with production in the country still unaffected."
"Essentially, the market is repricing in the fact that supply is ample under these conditions, and enough to meet even increased US demand."
Key quotes
"In the gold market, prices reacted negatively to another all-around strong payrolls report, but once prices started to near the lows of the recent range, buyers reappeared to keep the yellow metal from breaking lower. It seems that traders are waiting to see how the Fed reacts to this onslaught of positive data that continues to appear in the US and whether it will continue as such."
"Base metals reacted to the outcome of a much stronger payrolls picture by rising promptly after the release. However, yesterday's ADP payrolls foreshadowing, and subsequent heavy rally in the base metals, left little room for additional firepower today."
"Clearly, the bias had already shifted to the upside ahead of nonfarm payrolls. In general, we expect this direction for base metals will continue, with both the US and China now firing on a majority of their cylinders."
"Demand expectations will continue to remain firmly on the growth side, and those metals with mine supply side issues will benefit most. Namely, zinc and lead."
"The oil market reaction to the positive US surprise, which is demand positive for oil, was somewhat muted. The reason for this is related more so to the geopolitical developments and risk premium that has been built into the price over the past few months."
"However, concerns seem to be subsiding on multiple fronts, Russian/Ukraine tensions easing, the Libyan rebel's agreement to reopen oil export ports, and US military 'advisors' on in the ground in Iraq, along with production in the country still unaffected."
"Essentially, the market is repricing in the fact that supply is ample under these conditions, and enough to meet even increased US demand."