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Commodities: Soft Greenback after weak US services data softens blow to prices

By Alexander Bueso

Date: Thursday 03 Oct 2019

Commodities: Soft Greenback after weak US services data softens blow to prices

(Sharecast News) - Softness in the Greenback following the release of a key gauge of activity in America's services sector that some economists said was a "fair bit" below their forecasts helped to prop-up commodity prices across the board.
"With investor focus on global growth and still reeling from Tuesday's shock ISM report, today's US factory orders and services data released was key," said analysts at Sucden Financial.

"Weekly [US] jobless claims rose 4k. Initial reaction to the alarm bells saw stocks fall along with the USD, and gold making gains towards 1,520 as investors fled to safety. On the LME, copper prices dropped to 5,625 before recovering fairly quickly to 5,700 area."

As of 1859 BST, front month Brent crude oil futures were edging up by 0.24% to $57.83 a barrel on the ICE, having earlier fallen as low as $56.15.

Earlier, the Institute for Supply Management had reported a drop in its non-manufacturing Purchasing Managers' Index from a reading of 56.2 in August to 52.6 for September (consensus: 55.0).

Commenting on the ISM report, Barclays Research's Michael Millar told clients: "Although August's decline is coming off of a surprisingly strong August reading, it will likely fuel concerns that weakness in the more trade-exposed manufacturing sector (which accounts for 10-12% of overall GDP) is spilling into the broader economy."

But in the energy space it was natural gas futures that were pacing gains, with November natural gas on NYMEX climbing 2.89% to change hands at $2.31/MMBtu.

Dollar weakness also pushed the December gold contract on COMEX up by 0.39% to $1,513.80/oz., although COMEX-traded copper was down by 0.62% at $2.5545/lb..

In the background meanwhile, the US dollar spot index was down by 0.22% at 98.8010, helping to lift the Bloomberg commodity index off its intra-day lows at 77.04 to 77.82.

The main soft commodities contracts were all higher, led by gains of 1.53% for December dated cocoa and cotton on ICE to $2,520 per metric tonne and $0.6208, respectively.



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