Mounting signs of a rapid rebound in the Chinese manufacturing and construction sectors, as well as a further depreciation in the US dollar, offered some support to industrial commodity prices this week. However, concerns about rising virus infection numbers in the developed world and renewed lockdown measures capped gains. While we expect Chinese economic activity to fully recover by the end of this year, we think that the persistent uncertainty about the virus will continue to weigh on prices for some time.
Next week is busy on the data front. Market participants will be paying particular attention to the July Caixin manufacturing PMI for China and the US ISM surveys on Monday. We expect a stronger reading than the consensus in both and, if we are right, this should provide a small boost to the prices of industrial commodities. That said, news related to the virus and the fiscal support package currently being debated in the US will probably be the main drivers of market sentiment.
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