US markets were closed today in observance of Martin Luther King Jr. Day and the inauguration of Donald Trump as the 47th President of the United States. Markets had already been pricing in expectations of Trump’s inflationary policies, which contributed to the dollar’s strength in recent days. However, as investors realised they would need to wait for further policy details, the dollar saw a sharp pullback, with the dollar index dropping to just above 108.2. Meanwhile, the 10-year US Treasury yield remained mostly unchanged, hovering slightly above 4.6%.
The base metals space opened on a cautious note, following the previous week's gains and the incoming Trump administration. Bets for immediate announcement of tariffs has fuelled market expectations for a strong dollar. However, after Trump's inauguration, the lack of clarity on specific policies led to a selloff in the index, which provided some marginal gains across the complex. Copper remained steady above the $9,200/t mark, while aluminium edged higher to test the $2,700/t level. Aluminium remains particularly sensitive to supply dynamics. As the metal was trading at the lower end of its range, the announcement of potential sanctions on Russian suppliers has triggered a significant rally. At current levels, we believe that aluminium is exhausting its upside potential and expect a moderate decline as it mean reverts in the coming days. Lead and zinc edged higher to $1,990/t and $2,970/t, respectively.
Precious metals saw gains today, supported by the weaker dollar. Gold ticked slightly higher, trading at 2,708/oz, while silver climbed to 30.6/oz. Oil prices declined, with Brent crude falling to 79.9/bbl as Trump's policies are expected to favour increased US oil and gas production, potentially leading to higher supply.
All price data is from 20.01.2025 as of 17:30