Risk appetite improved as global equities rallied across all regions, taking back some recent losses. U.S. inflation tomorrow is expected to increase further to 7.2%, but energy and commodity prices continued to rally, and supply-chains have not eased. The high reading will force the Fed’s hand, but as mentioned yesterday but rate hikes are priced in already, a significant beat of the data would cause the U.S. 10yr to rally through 2%, currently trading at 1.922%. Today, the dollar was marginally softer, trading at 95.49 and holding above 100 DMA. Mortgage approvals in the U.S. were weaker by 8.1% to February 4th, and wholesale inventories gained 2.2%. EURUSD has consolidated today, with cable struggling into 1.36.
Metals were well supported today; aluminium, copper, and nickel led the way. Aluminium closed just off the high at $3,266/t; the cash to 3 months spread weakened marginally to $17.5/t back. Copper caught a bid today, breaking back above $10,000/t; the low inventory environment with Chinese demand coming out of the seasonally low period indicates higher prices in the near term; the cash to 3-month spread is at $35/t. Zinc pushed back above $3,600/t and closed at $3,644.5/t. Nickel broke back above $23,000/t and trades at $23,210/t. Lead was bid but failed to close above $2,250/t and settled at $2,243.50/t. Iron ore and steel lost ground overnight but caught a bid this afternoon with SGX iron ore at $148.05/t and SHFE rebar at 4,883/t.
Energy prices rallied this afternoon to test appetite at $92/bl and $90/bl, but trade just of the highs at the time of writing. Precious metals edged higher, with gold at $1,834/oz and silver at $23.32/oz.
All price data is from 09.02.2022 as of 17:30