'Commodities to focus on Chinese economic outlook, virus situation'

2nd Aug,2021

'Commodities to focus on Chinese economic outlook, virus situation'


Concerns about the virus have grown as the Delta version has spread throughout the world, and while there has been little reaction thus far, the growing number of cases globally may push countries to adopt more rigorous measures. Commodity prices, on the whole, closed the week higher, owing to a lower US currency. In response to the Fed's monetary policy announcement, the US dollar index fell to a one-month low. Gold has risen to a two-week high on the COMEX, while crude oil has surpassed $73 a barrel and copper has surpassed mid-June highs. The Fed maintained interest rates and bond purchases steady, as expected. The Fed also had a positive perspective, stating that they were nearing the end of their asset buying programme. The Federal Reserve of the United States, on the other hand, did not provide a precise timeframe for reducing asset purchases, which calmed market concerns. The Federal Reserve shook global markets earlier this month when it predicted two rate rises by 2023. This, combined with the greatest level of consumer price inflation since 2008, has fanned speculation that the central bank may begin tightening measures shortly. The Fed's action this week, on the other hand, demonstrates that the central bank is still waiting and watching. This is justifiable in light of the growing uncertainty generated by the Delta variant's proliferation. In the aftermath of the increasing viral cases, a number of nations have tightened restrictions, while the United States has kept travel prohibitions in place and advised unvaccinated people to wear masks. The Fed's cautious approach comes at a time when other central banks, such as the European Central Bank and the Bank of Japan, have continued to promote accommodating policy as a means of boosting economy.