Commodities Look To US Home Sales, German CPI To Drive Risk Trends

Commodities pushed higher as expected through much of the US trading session on the back of broadly better-than-expected economic data set but gains were swiftly erased toward the end of the session after the Fed’s Charles Plosser came across the wires. The President of the central bank’s Philadelphia branch said the newly-initiated QE3 stimulus effort won’t boost employment and endangers the Fed’s credibility.

Looking ahead, the spotlight turns to US New Home Sales figures. Expectations call for a print at 380,000 in August, marking the highest reading since April 2010. The outcome may boost hopes that a firming US recovery will be better able to offset a recession in the Eurozone and slowdown in Asia this year, stoking risk appetite and driving growth-geared crude oil and copper prices higher. Gold and silver may likewise find support in such a scenario amid ebbing haven demand for the US Dollar.

In the interim, the preliminary set of September’s German CPI figures headlines the European data docket. Forecasts suggest the benchmark inflation rate will drop to 2 percent, backing away from the four-month high at 2.1 percent recorded in the prior month. A print in line with expectations would fall in line with the year-to-date average and probably pass with little fanfare. A significant downside surprise may prove sentiment-supportive however as investors build hopes for additional ECB easing.

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