- Steel Price pares intraday gains as traders fears more supplies, economic slowdown.
- China’s official PMIs fail to please metal buyers amid broad pessimism.
- US dollar retreat probes bears ahead of the Fed’s preferred inflation gauge.
Steel Price struggle to extend the weekly gains, bracing for the quarterly loss, as fears of recession join supply woes during Thursday’s Asian session. Even so, industrial metal manages to react to the firmer activity numbers from China.
That said, construction steel rebar on the Shanghai Futures Exchange (SFE) edged up 0.1% around 4,370 yuan per metric tonne, while hot-rolled coil decline 0.1% by the press time. Further, Stainless steel rose 0.8% intraday but stays pressured of late.
Talking about China data, the preliminary readings of official PMIs for May came in better than previous readings. That said, the headline NBS Manufacturing PMI rose to 50.2 versus 49.6 prior, versus 50.4 forecasts. Further, Non-Manufacturing PMI rallied to 54.7 versus 52.5 expected and 47.8 in previous readings.
However, the major central bankers’ readiness to battle inflation, even at the cost of short-term economic slowdown, recently exerts downside pressure on the market sentiment.
Among them, Fed Chairman Jerome Powell repeated his latest pledge to battle inflation with readiness to announce another 0.75% rate hike if needed. The Fed Boss also praised the US economic strength and helped the US dollar to remain firmer. It’s worth noting that Powell’s comments suggesting challenges for US jobs data during the battle with inflation appears to have weighed on the risk profile of late.
While portraying the mood, the US 10-year Treasury yields snap a two-day downtrend as the key bond coupons rebound from the weekly low to 3.10%, up one basis point (bp). The same seems to probe the US dollar buyers as the US Dollar Index (DXY) retreats from a two-week high to 105.00. Further, the S&P 500 Futures drop 0.30% intraday to 3,810 at the latest.
Elsewhere, increasing steel production in Asia and the recent increase in the output appears to have exerted additional downside pressure on Steel Price.
Moving on, the metal prices are likely to remain pressured with today’s US the Core Personal Consumption Expenditure (PCE) Price Index, expected 0.4% MoM versus 0.3% prior, being an important catalyst to watch for short-term directions. Should the Fed’s preferred inflation index remain firmer, the odds of witnessing aggressive rate hikes can’t be ruled out, which in turn appears negative for commodities. Additionally, the higher rates also negatively affect the growth and demand for the industrial metal, offering a double-barrel attack on the metal if today’s US data came in firmer.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.