During the last quarter, the markets expected the Fed to begin a cutting cycle, which caused the dollar and Treasury yields to decrease. This, along with predictions of China's recovery in 2024, boosted the prices of base metals by the end of the year. However, in Q1, the situation has changed. The US economy has shown robustness in terms of the labour market and consumer performance, which has led the market to price in the probability of cuts further down the curve. Additionally, despite continued support from the government, Chinese pessimism has yet to subside. In the upcoming months, macroeconomics will continue to play a crucial role in driving the day-to-day momentum, particularly in the aluminium and copper markets. Structural and cyclical indicators will also come into play when assessing the path for base metals performance. COT positioning, spreads, and stocks will drive the general price trend in the first half of the year while anticipating an economic recovery and easing monetary policy pressures in the latter half of the year.
Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs.
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Read our short coffee crop update, with commentary on recent price activity, and coffee market forecasts to take advantage of market movements. The coffee industry witnessed turbulent prices last year, affecting both Arabica and Robusta contracts. The industry remains reliant on Brazil and Vietnam, accounting for 58% of the total blend. Although the weather is still a concern, we believe that most of the damage has been done, and the expectations of a super crop are likely to fade. In our view, there is no shortage of coffee overall, but there are gaps in certain regions creating uncertainty regarding coffee accessibility.
The team presented findings from our upcoming Quarterly Metals Report, with analysis and forecasts for base metals, precious metals, iron ore and steel.
• Global slowdown• Higher interest rates• Weakening data• Poor liquidity
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