Commodities: Mixed as the stronger USD creating headwinds for the sector - ANZ

Research Team at ANZ, notes that the commodities were mixed overnight, with the stronger USD creating headwinds for the sector.

Key Quotes

“Brent crude oil traded around USD46/bbl as investors saw an increasing chance that OPEC would reach an agreement on production cuts. Saudi Arabia’s oil minister Khalid A. Al-Falih said that he’s optimistic a deal would be concluded in Vienna. He also stressed the output ceiling for OPEC would be set at 32.5 mb/d.”

“Copper led the gains in the industrial metals complex, driven by positive economic data. US new home construction rose to a nine year high in October. This helped reignite the positive sentiment from the recent US infrastructure-induced rally. Aluminium and nickel ended lower, succumbing to the stronger USD. Iron ore post physical prices jumped higher despite losses in futures markets in China. BHP CEO Andrew Mackenzie expects the recent surge in prices to end, with prices not reflecting fundamentals.”

“Gold prices initially held steady after Yellen’s comments, but finally buckled under the weight of diminishing investor demand. Holdings in gold-backed ETFs continued to fall, with the latest Bloomberg data showing holdings fell another 3.6 tonnes to 1949.1 tonnes on Wednesday.”

“Agriculture markets were mixed, with grains surging higher while softs were slightly weaker. Wheat prices in the US jumped higher on the back of stronger futures in China.”