It has generally been a positive week for commodity prices. Most metals and agricultural prices rose on the week, in somewhat of a turnaround from recent trends. By contrast, energy commodities fell for the second consecutive week, as concerns about the US and China’s oil demand continue to weigh on oil prices, while easing Australia LNG supply fears dragged natural gas prices lower.
In the week ahead, China’s PMIs will give some indication as to whether manufacturing activity and commodities demand deteriorated further in August. If it has, commodity prices are likely to fall. In addition, the construction PMI might reveal whether orders for local governments to utilise their remaining bond quotas is bearing fruit for infrastructure spending.
Elsewhere, we expect US non-farm payrolls data to show that employment growth is trending lower, which may give a near-term boost to commodity prices if it leads to some weakness in the US dollar.
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