US stocks fell today, and the dollar rebounded back to 104.40 as investors braced for the key inflationary reading tomorrow to help guide the Fed interest rate outlook. In the meantime, US Census Bureau data pointed out that inflation-adjusted household income fell by 2.3% y/y in 2022 after higher costs of living weighed on households' spending habits. At the same time, the ECB's decision on Thursday is still on the knife edge, with 12bps being priced in, as policymakers are seen to be split about their decision for further tightening. We expect that the ECB is more concerned with bringing inflation to the target level in a timely manner than the economy falling into a recession, so another hike worth 25bps is likely.
Marginal weakness was seen across the base metals market today on the back of dollar resilience. Base metals continued to be influenced by the dollar moves, especially on the days with little macro and fundamental data out of the US and China. Tomorrow's CPI print should help guide prices across the board. Aluminium softened slightly, fluctuating around the support level of $2,200/t but struggling to break completely below it, settling at $2,196.50/t. Likewise, copper edged slightly lower throughout the day but lacked the conviction to breach the $8,350/t support; the metal closed at $8,391/t. Nickel continued to trace lower, testing the robust support level of $19,950/t once again to close just below at $19,923/t. Lead and zinc closed lower at $2,219.50/t and $2,479/t, respectively.
Both WTI and Brent once again jumped higher, superseding a 10-month high as production cuts by OPEC+ continue to strain global supplies. Gold and silver remained broadly unchanged.
All price data is from 12.09.2023 as of 17:30