Metals Shine While Oil Attempts a Fragile Rebound

Hello traders, welcome to Wednesday, following a very heavy and volatile Tuesday. Yesterday was dominated by macro data, starting with PMI releases. PMIs were largely mixed: US figures came in slightly below expectations, the UK surprised positively, Germany disappointed, and France delivered mixed readings. However, PMIs were not the main driver. The key event was the Non-Farm Payrolls, unusually published on Tuesday instead of Friday. NFPs surprised to the upside at 64,000 versus 51,000 expected, but the details painted a weaker picture. Average hourly earnings and retail sales disappointed, while the unemployment rate climbed to 4.6% from 4.4%, higher than expected. This mix triggered heightened volatility across markets and a rapid repricing of expectations.

Wednesday already brought another important release: UK CPI, which came in sharply lower at 3.2%, well below expectations. This immediately crushed the British pound, making it the weakest currency in the market. Still ahead, traders are waiting for New Zealand GDP, expected at 0.9%, which could further influence antipodean currencies. On indices, sentiment has improved notably. Equity markets began recovering in the second half of Tuesday and that bullish momentum is carrying into the early part of Wednesday’s session, with indices attempting to push higher.

On the currency market, we are seeing a reversal in the US dollar, which is regaining strength after recent weakness. The Canadian dollar is also rising, while both the Australian and New Zealand dollars are showing resilience. In contrast, the Japanese yen, which was strong on Monday and Tuesday, is weakening today, and the British pound is clearly the weakest currency due to the inflation shock. Commodities are showing strong divergence: oil is attempting a rebound from long-term lows, although this still looks like a dead-cat bounce rather than a structural reversal. Metals, however, are exceptionally strong. Silver is up nearly 4%, platinum and palladium are more than 2% higher, while gold is rising more modestly and continues to lag behind silver. This leaves us on Wednesday still digesting the shock from Tuesday’s labor data, with metals leading risk appetite and currencies rapidly adjusting to shifting macro expectations.

Source: https://www.axiory.com/analytics/market-news/metals-shine-while-oil-attempts-a-fragile-rebound