Mini program: Daily summary of investment bank/institution perspectives.
Goldman Sachs: Postpones the year-end target copper price of $0.012 million to after 2025.
Goldman Sachs analysts wrote that this summer's changes in copper supply and demand have led to a significant price response. Despite supply issues and a significant decrease in copper consumption, refined copper production has actually increased. Therefore, the analysts stated that Goldman Sachs' expectation of a significant reduction in copper inventories will be much later than previously expected. Goldman Sachs has delayed its year-end copper price target of 0.012 million US dollars to after 2025, which means the average estimated price of copper in 2025 will be $10,100 per ton, still higher than this year's data, but much lower than the previous average estimated price of $15,000 per ton.
Goldman Sachs: Lowers the 2025 copper price forecast by nearly $5000, still strongly bullish on gold.
Goldman Sachs has exited its long call position on copper and lowered its copper price forecast by nearly $5000 in 2025, citing shrinking demand. The bank has always been one of the biggest supporters of copper, but now expects the average copper price next year to be $10,100 per metric ton, compared to the previous expectation of $15,000 per metric ton suggested by analysts Jeffrey Currie and Nicholas Snowdon. Due to the influx of funds, the copper price soared to a new high of over $11,000 per metric ton in May, but has since declined by about 18%. Goldman Sachs also stated that gold is 'the commodity we have the most confidence in for the recent increase', and maintains a target of $2700 per ounce for early 2025.
Goldman Sachs: Gold has the greatest potential for price increases in the near future.
Goldman Sachs believes that gold has the highest potential for price increase in the near future, as it is the preferred risk hedge tool, while other commodities are "more selective and lack constructiveness". Goldman Sachs analyst stated in a report titled "Go for Gold" on Monday: "The expected rate cut by the Federal Reserve is expected to bring Western capital back to the gold market, which was a factor that rarely occurred during the significant increase in gold prices over the past two years." Goldman Sachs has adjusted the target price for gold of $2700 to be reached by early 2025, previously predicted to be the end of 2024, with the reason being that the Chinese market is sensitive to price. The bank believes that price sensitivity can also prevent a significant drop in assumed prices, which could boost purchasing demand in the Chinese market.
Deutsche Bank: Almost no one will take a risk of heavily positioning the US dollar in any direction before Friday.
The US dollar fell before the release of US employment data, which could change the market's expectations for a rate cut by the Federal Reserve. Antje Praefcke, a foreign exchange analyst at Deutsche Bank, said in a report that the US dollar could experience "back-and-forth fluctuations" on Wednesday and Thursday, but "hardly anyone would take a big risk in either direction" because the report on Friday would be decisive. She emphasized the importance of the employment data for August, as the report for July had already sparked speculation about a larger rate cut.
Mitsubishi UFJ: The dollar may further decline due to the prospect of a rate cut.
Mitsubishi UFJ stated that as the Fed is likely to start cutting interest rates in September and may give a more further rate cut signal than previously expected, the dollar may further decline after the recent fall. Analysts mentioned: "The next set of forecasts in September will show an increase in unemployment and a decrease in inflation, which will form the basis for the start of the rate cut cycle." They said that the median interest rate forecast for 2024 may rise from one rate cut to possible three or four. However, broader geopolitical risks and a weak German economic growth should limit the dollar depreciation. Mitsubishi UFJ expects the euro to dollar EUR/USD to rise from the current 1.1035 to 1.12 by the end of the year.
Morgan Stanley: The US Dollar Index is unlikely to fall below 100.
Morgan Stanley expressed doubt about whether the US Dollar Index would fall below the key level of 100, even though Fed Chairman Powell signaled a policy easing in the Jackson Hole meeting, the risks lean towards further softening of the dollar. "Both psychologically and technically speaking, the 100 level of the US Dollar Index is very important. Without changes in global forces, this level is difficult to break," wrote David Adams, the bank's G-10 forex strategy director, in a report released on Tuesday. He added that political risks in Europe may still be underestimated, and the US 2024 election is an obvious bullish risk event for the US Dollar.
UBS Group: Employment data will determine whether the golden girl trend continues.
UBS derivatives trader: It is worth noting that the period of continuous rate cuts by the Federal Reserve often accompanies a decline in the stock market, due to weakened growth momentum and rising unemployment. As many have observed, the number of jobs is becoming increasingly important as it determines whether the golden girl/perfect inflation decline will continue.
Bank of America: Bad data spells market woes, critical employment data tilts towards softening.
According to Sebastian Redler, the chief strategist of Bank of America, although the macro situation in the United States is still "chaotic," two issues have become clear: first, the market's focus has shifted from inflation to concerns about growth, which means that bad macro data could translate into stock market pain. Secondly, they stated that the U.S. labor market is a key indicator of the macroeconomic outlook. They said, "The U.S. unemployment rate has risen 90 basis points from its trough, 80 basis points year-on-year. This has only happened during recessions in the past 75 years. There are some reasonable explanations for why this time may be different, but we still believe the balance of risks tilts toward further weakness in the labor market."
9. Bank of America: The Bank of England may be cautious about cutting interest rates.
Bank of America analysts said in a report that they expect the Bank of England to remain cautious in cutting interest rates, with only one more cut in November this year, followed by four cuts in 2025, and then one cut in 2026. They said, "Strong growth above trend and persistent inflation risks indicate that the easing cycle will proceed slowly." Bank of America expects the UK economy to grow by 1.1% in 2024, higher than the previous forecast of 0.8%. "Growth may be supported by a rebound in real incomes and a weakening impact of rate hikes."
10. Bank of America: The European Central Bank may cut interest rates by more than the market expects.
Bank of America said that the European Central Bank continues to maintain a very cautious attitude towards its interest rate cut cycle, and expects that the interest rate cut in 2025-2026 will exceed market expectations. Bank of America analysts stated in the report that the deposit interest rate will be reduced to 2% in the third quarter of 2025 (currently 3.75%), and to 1.5% in 2026. They said, "Inflation is lower than expected, so the European Central Bank is expected to cut interest rates to their neutral rate expectations in 2025 and further cut interest rates in 2026. This is still the basic situation."
11. Royal Bank of Canada: If market stability is affected, Saudi Arabia may change the OPEC+ production increase plan.
Helima Croft of Royal Bank of Canada's capital markets said that if OPEC+'s gradual increase in production plan is proven to be detrimental to market stability, Saudi Arabia may decide to adjust the organization's production strategy. "Given that most of the additional production comes from Saudi Arabia, we believe that there is still some kind of single decision-maker dynamics when additional production enters the market." She added that due to sustained demand concerns, a cautious approach for OPEC+ would be to postpone the plan, but the organization may consider that the impending interest rate cut in the United States and the decline in Libyan production have created more space in the market.
