A cautious start to the year

The prices of most commodities trended higher this week, supported by a weaker US dollar. Falling US stocks and heightened geopolitical risk pushed the oil price higher. In contrast, industrial metals mostly fell despite the pick-up in China’s Caixin manufacturing PMI for December. Turning to next week, it will be relatively quiet on the data front. The oil market will be closely monitoring developments in Iran. Oil would be a key beneficiary of any escalation in the tensions there. On Friday, China’s December trade data will tell us more about commodity demand at the end of last year. Iron ore imports are likely to have held up despite lower steel output, given the preference for higher-quality ore.