Economic Outlook: Is the Commodity Market Poised for a Surge this Week?

The New Year has begun and as we ease into it, there are several factors that are important for traders moving towards the future of commodities as well as forex markets. 

As forex market data is set to rock the market, what about the economic data that has been dominating the global sphere? 

Would it also provide for a significant impact on the whole scenario of gold? silver, crude oil and the forex market? 

Well, all the answers will be answered in our Weekly Economic Outlook.

So without further adieu, let’s begin!!

US Inflation Data and its Impact on the Commodities Sector: 

There is a plethora of data sets coming for the whole week but the most important of them would just be the US inflation data that’s incoming on Thursday 

On the US front, the main focus as we said will be on the inflation numbers and investors are intent on finding clues about the possible interest rate developments. 

As per the latest economic outlook that’s emanating from the US base, the December Inflation numbers could potentially increase the expectations for March or push them later in the year. Coming to core inflation, it is slightly higher at 4% and still not reaching the target set by the Fed which is 2 %. The monthly data is expected to be 0.2%, slightly down from 0.3% previously. 

Coming to the topic of inflation, its relation to Commodities is quite interesting. Several changes in commodity prices usually continue to drive overall inflation trends. When inflation is on the rise, the real commodity prices rise as does a rise in the trend inflation. In the 1970s inflation played a crucial role in commodity price dynamics but now it does not do so too much. 

US bank Earnings Reports Q4:

Another focus in the market and a part of the economic outlook would be the US bank earnings reports which would be reporting previewing the 4th quarter reports. 

As per the trends, the 4Q 2023 earnings would kick off with the major US banks starting with JP Morgan, Citigroup, Wells Fargo and Bank of America on this Friday, January 12, 2024. 

The failing bond yield in 4Q 2023 might offer bank stock some breathing space. The recovery in the bond prices in 4Q 2023 might just alleviate the losses on the bank’s securities portfolio, thereby adding to bringing back some confidence for the stability of the banking sector. 

Hence, this is one of the main events that you need to look out for.

Oil Prices Rise!! Will the Red Sea issue be solved?

Previously as per a report by Reuters on January 03rd, the Oil prices were on the rise in the first session of the new year and were potentially boosted by the potential disruption to Middle Eastern Supply after the latest attack on a container ship in the Red Sea. 

The US helicopter on Sunday had repelled an attack by Iran-backed Houthi forces in the Red Sea, in the end sinking 3 Houthi vessels and killing 10 of the militants fueling an escalation in the Israel- Hamas war. 

At least 4 tankers carrying diesel and jet fuel from the Middle East and India to Europe are sailing around Africa to avoid the Read Sea, as per the hip tracking data, 

So this is one aspect to keep track of. 

Indian Indices Quarterly Results 2024: 

As the new year begins in 2024, India is poised to release its Indian Indices quarterly results. 

Starting from January 03rd extending towards February 23. In 2024, a plethora of companies will be releasing their quarterly results. 

The Economic outlook is looking great as financial companies like Mahindra and Mahindra Financial Services, bajaj finserv, Baja Holdings and investment to PSU companies, and more quarterly results are on the way. So traders should keep an eye out for these so that their preferred stocks can be kept in focus. 

India’s Budget 2024: 

All eyes will be on Finance Minister Nirmal Sitharama’s sixth Union budget which will be scheduled for the 1st of February. 

With high expectations, the Finance minister has already put hopes of a big announcement in the 2024 budget given that it will be the last Union budget of the Narendra Modi government before the 2024 Lok Sabha election. 

The Finance minister has intimated that there might not be any big announcements since the elections are held as per the latest economic outlook.

She further adds, 

“It is a matter of truth that the February 1, 2024 Budget that will be announced will just be a vote-on-account because we are in an election mode and the election happens during the coming summer. So the Budget that the government presents would just be a Budget to meet the expenditure of the government till a new government comes into play, so you may have to wait till after the new government comes in. In July 2024, there will be the next full Budget. So things have to wait till then”

However, the budget might hold clues towards the future economic infrastructure of India. 

A perspective from Commodity Samachar: 

Our analysts at Commodity Samachar have been tracking the market movements vigilantly since the start of the Week and here’s what our Head of Research Ankit Kapoor had to say

“Our main focus for this week would be the US inflation data which is a crucial factor towards the market movements. As per the reports, all things remain stable and in the level of expectation, however in the event the inflation data exceeds what the Fed had been envisioning, a panic could be seen in the market. 

If things go well and the inflation rates stay stable, then the Fed may start cutting rates starting Marach, 2024.”

That’s all for the weekly outlook. We’ll be back with more updates soon. 

Until then, Happy Trading!!

Commodity Samachar
Learn and Trade with Ease

Also Read: Dollar Index Rises After First Weekly Gains Since July. Is This The Beginning Of Something Special? , Economic Calendar in Focus: Will US, China Inflation, and UK GDP Trio Reshape Economic Moves?

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