Commodity prices came under pressure this week from a strong US dollar, which surged to multi-year highs against the euro.
The dollar rallied as the European Central Bank (ECB) neared the launch of its massive stimulus package and after strong US jobs data raised the possibility of a hike soon to US Federal Reserve interest rates.
A strong dollar makes commodities priced in the US unit more expensive for holders of rival currencies.
The euro on Friday sank to US$1.0845 — its lowest level since September 2003.
The ECB is to begin its 1.1 trillion euro (US$1.19 trillion) quantitative easing stimulus tomorrow.
The US Labor Department on Friday said that the US economy pumped out a stronger-than-expected 295,000 net new jobs last month.
“The dollar surged higher, having already gained substantially ... from the European Central Bank’s quantitative easing program and weak eurozone GDP growth,” Centre for Economics and Business Research economist Alasdair Cavalla said.
OIL: Oil prices won support this week from unrest in Libya, helping to offset a surge in US crude inventories.
Sydney-based CMC Markets chief market strategist Michael McCarthy said that traders were “seeing a lot of upside potential, possibly based on tensions in the Middle East and Ukraine.” “Somehow, we are seeing investors looking away from the huge build in US [crude oil] inventories this week,” he added.
Libya’s National Oil Corporation declared force majeure on Wednesday at 11 oil fields after attacks by Islamists. The OPEC member country has been battling the rise of militias seeking control of its cities and oil wealth since the killing of former Liban leader Muammar Qaddafi in 2011.
Unabated fighting has seen its output reduced from a high of almost 1.5 million barrels a day to 150,000, according to analysts. In Ukraine, investors are closely watching latest efforts to prop up a ceasefire in the country’s eastern region, currently controlled by pro-Russia rebels. The 10-month conflict in the country — a key conduit for Russian energy exports to Europe — is seen as Europe’s worst since the war in the Balkans in the 1990s.
Meanwhile, data on Wednesday showed a 10.3 million barrel surge in US crude reserves in the week to Feb. 27, which dampened expectations of robust demand in the world’s biggest economy. The global oil market has lost about 50 percent of its value since June last year, weighed down by the global supply glut.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in April slid to US$60.10 a barrel from US$61.67 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for April rose to US$49.83 a barrel from US$48.94 a week earlier.
PRECIOUS METALS: Gold and silver lost their shine as the dollar shot higher.
“Precious metals came under some renewed selling pressure as the dollar resumed its ascent against most currencies,” said Saxo Bank analyst Ole Hansen.
By Friday on the London Bullion Market, the price of gold fell to US$1,175.75 an ounce from US$1,214 a week earlier.
Silver slumped to US$15.99 an ounce from US$16.53.
On the London Platinum and Palladium Market, platinum slipped to US$1,166 an ounce from US$1,177.
Palladium rose to US$823 from US$808 an ounce.
BASE METALS: Base or industrial metals were mixed as investors reacted also to a growth outlook from commodities-hungry China.
China on Thursday lowered its economic growth target for this year to “approximately 7 percent”, scaling down expectations in the face of “formidable” difficulties for the world’s second-largest economy after its decades-long boom.
By Friday on the London Metal Exchange, copper for delivery in three months dropped to US$5,747.50 a tonne from US$5,862 a week earlier.
Three-month aluminum slipped to US$1,795 a tonne from US$1,810.
Three-month lead gained to US$1,806 a tonne from US$1,747.
Three-month tin grew to US$18,090 a tonne from US$17,910.
Three-month nickel increased to US$14,310 a tonne from US$14,110.
Three-month zinc retreated to US$2,016 a tonne from US$2,068.
SETBACK: Apple’s India iPhone push has been disrupted after Foxconn recalled hundreds of Chinese engineers, amid Beijing’s attempts to curb tech transfers Apple Inc assembly partner Hon Hai Precision Industry Co (鴻海精密), also known internationally as Foxconn Technology Group (富士康科技集團), has recalled about 300 Chinese engineers from a factory in India, the latest setback for the iPhone maker’s push to rapidly expand in the country. The extraction of Chinese workers from the factory of Yuzhan Technology (India) Private Ltd, a Hon Hai component unit, in southern Tamil Nadu state, is the second such move in a few months. The company has started flying in Taiwanese engineers to replace staff leaving, people familiar with the matter said, asking not to be named, as the
The prices of gasoline and diesel at domestic fuel stations are to rise NT$0.1 and NT$0.4 per liter this week respectively, after international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to rise to NT$27.3, NT$28.8 and NT$30.8 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to rise to NT$26.2 per liter at CPC stations and NT$26 at Formosa pumps, they said. The announcements came after international crude oil prices
SinoPac Financial Holdings Co (永豐金控) is weighing whether to add a life insurance business to its portfolio, but would tread cautiously after completing three acquisitions in quick succession, president Stanley Chu (朱士廷) said yesterday. “We are carefully considering whether life insurance should play a role in SinoPac’s business map,” Chu told reporters ahead of an earnings conference. “Our priority is to ensure the success of the deals we have already made, even though we are tracking some possible targets.” Local media have reported that Mercuries Life Insurance Co (三商美邦人壽), which is seeking buyers amid financial strains, has invited three financial
CAUTION: Right now, artificial intelligence runs on faith, not productivity and eventually, the risk of a bubble will emerge,’ TIER economist Gordon Sun said Taiwanese manufacturers turned more optimistic last month, ending a five-month streak of declining sentiment as concerns over US tariffs, currency volatility and China’s overcapacity began to ease, the Taiwan Institute of Economic Research (TIER) said yesterday. The manufacturing business confidence index rose 1.17 points from June to 86.8, its first rebound since February. TIER economist Gordon Sun (孫明德) attributed the uptick to fading trade uncertainties, a steadier New Taiwan dollar and reduced competitive pressure from Chinese producers. Taiwan’s semiconductor industry is unlikely to face significant damage from Washington’s ongoing probe into semiconductors, given the US’ reliance on Taiwanese chips to power artificial
RSS