The focus will be on US policy

This week started on a positive note with news that both the official and unofficial China manufacturing PMIs turned up in June. However, a bumper increase in US June non-farm payrolls on Friday weighed on commodities prices, as it raises the prospect of Fed tightening and dollar strength. Some clarity on Fed policy might be forthcoming at Janet Yellen’s semi-annual monetary policy testimony next week. Our view is that, despite the lack of a pick-up in wage growth and core inflation, the Fed will push ahead with hiking interest rates. Elsewhere, China’s trade data on Thursday will give us some indication of the strength of commodities demand last month. Finally, we will keep an eye on China’s credit data, due next week, for signs that credit creation continued to slow in June.