Disruptions in the global supply chain hit commodities – TDS

FXStreet Insights Team FXStreet

Global supply chains have been ravaged by an unforgiving series of disruptions. Power generation has been hampered by coal shortages and extreme weather in China. At the same time, Bitcoin mining activity was particularly power-hungry, amid a trading frenzy. Rising metals supply risk and a large global surplus point to structural frictions in the world of commodity trading, according to strategists at TD Securities.

Bitcoin miners further strained Chinese power demand

“While electricity generation problems were significant factors, Bitcoin's trading frenzy may have also contributed to the surge in power demand which ultimately forced Beijing to curtail smelters' output.”

“Regardless, China's Bitcoin mining ban should alleviate demand on the grid, while officials work to tackle power supply issues, which should also soon be addressed barring extreme weather.”

“More importantly for commodities will be the world's ability to correct the disruptions in the global supply chain.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD stays below 1.1850 after dismal German sentiment data

EUR/USD stays in negative territory below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.

GBP/USD falls toward 1.3550, pressured by weak UK jobs report

GBP/USD remains under bearish pressure and extends its decline below 1.3600 on Tuesday. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.

Gold recovers modestly, stays deep in red below $4,950

Gold (XAU/USD) stages a rebound but remains deep in negative territory below $4,950 after touching its weakest level in over a week near $4,850 earlier in the day. Renewed US Dollar strength makes it difficult for XAU/USD to gather recovery momentum despite the risk-averse market atmosphere.

Canada CPI expected to show sticky inflation in January, still above BoC’s target

Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Stellar mixed sentiment caps recovery

Stellar price remains under pressure, trading at $0.170 on Tuesday after failing to close above the key resistance on Sunday. The derivatives metric supports the bearish sentiment, with XLM’s short bets rising among traders and funding rates turning negative.