Commodity prices stabilized on Wednesday, while the US dollar declined sharply in favour of the euro as investors refrained from using the common currency to fund carry trades.
The rout in commodities ended on Wednesday, with energy and precious metals rebounding from recent lows. US oil prices climbed to a session high of $38.39 a barrel. They would later consolidate at $37.63 a barrel, gaining 12 cents or 0.3% on the New York Mercantile Exchange. International benchmark Brent crude traded within a very narrow range before settling up 11 cents or 0.3% at $40.37 a barrel on ICE Futures Europe.
Precious metals commodities rebounded across the board. Gold for February delivery climbed $7.90 or 0.7% to $1,083.20 per troy ounce. Spot gold was up more than $9. Silver futures also rallied 18 cents or 1.3% to $14.30 per troy ounce. Meanwhile, platinum spot climbed $8.62 or 1% to $856.65 per ounce.
The US dollar, which normally trades inversely with precious metals commodities, declined sharply on Wednesday. The dollar index, a weighted average of the US currency against a basket of six rivals, fell 0.8% to 97.66, its lowest level in a week.
The dollar lost considerable ground to the euro, which has gained more than 4% since last Thursday. The EUR/USD exchange rate climbed 0.7% to 1.0975.
Steadying commodity prices weren’t enough to lift global stocks, which declined across the board on Wednesday. The Nikkei 225 Index in Tokyo fell 191.53 points or 1% to 19,301.07. Hong Kong’s Hang Seng Index also fell 101.37 points or 0.5% to 21,803.76. The CSI 300 Index in China scraped together modest gains, climbing 12.92 points or 0.4% to 3,635.94.
In economic data news, Chinese consumer inflation improved slightly in November, while producer prices declined for a 45th consecutive month, government data showed.
The consumer price index was unchanged in November compared with a month ago, which translated into an annual rate of 1.5%.
The producer price index was down 5.9% annually in November.
The major stock indices in Europe also declined on Wednesday, with the pan-European STOXX 600 declining 0.7%. The commodities selloff shaved 1.8% off the benchmark gauge in the previous session.
US stocks also traded lower after the opening bell. The Dow Jones Industrial Average posted back-to-back triple-digit declines on Monday and Tuesday, putting the gauge back in negative territory for the year.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.