Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

The dollar has been lifted by a stronger-than-expected US economy, the world’s largest, US investment bank Goldman Sachs said. (AFP)
Updated 21 September 2018
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Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

  • The dollar has been lifted by a stronger-than-expected US economy, the world’s largest
  • A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies

BENGALURU: Goldman Sachs said a stronger dollar is unlikely to derail its bullish view on commodities, which are likely to find support from physical shortages.
The dollar has been lifted by a stronger-than-expected US economy, the world’s largest, and that’s a positive sign for global growth, the US investment bank said.
The US dollar index has lost more than 1 percent this week, but this follows months of strong demand over US-China trade-related tensions, as investors bet the greenback would gain at the expense of riskier currencies.
“The risk aversion this summer created significant emerging market destocking, particularly in China, as consumers attempted to avoid a strong dollar and tariffs by liquidating inventories,” Goldman said in a note dated on Thursday.
A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies, making buyers and users more likely to draw on any stored materials in preference to imports.
“This liquidation, however, has a physical limit with Chinese destocking having already created significant increases in physical (premiums) for oil and metals – a sign of physical shortages.”
Going forward, oil had a strong fundamental outlook helped by US demand growth, supply losses and disruptions, and still constrained US shale output, Goldman said.
The bank said its near-term Brent crude oil price target remained at $80 a barrel.
The bank said it was moderating its bullish view for gold due to a sell-off in emerging markets, and it lowered its 12-month price forecast for the metal to $1,325 per ounce, down from $1,450 an ounce earlier.


Boeing’s 737 deliveries rise in November

Updated 42 min 37 sec ago
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Boeing’s 737 deliveries rise in November

LONDON: Boeing Co. delivered 61 of its best-selling 737 single-aisle aircraft in November, up from 50 a year earlier, suggesting that the planemaker may be finally moving past supplier problems that have dented production.
Total deliveries for the first 11 months of 2018 rose to 704 from 680 in the same period a year earlier. Boeing expects to deliver 810-815 planes in 2018.
The company has been striving to overcome production bottlenecks stemming from delays in the delivery of fuselages and engines from its suppliers.
Investors and analysts closely watch the number of planes Boeing turns over to airlines and leasing firms for cues on the company’s cash flow and efficiency.
Airbus said last week it had delivered 673 aircraft up to the end of November, leaving 109 aircraft still to be delivered in December to reach a core target of 782 deliveries.
Boeing delivered a total of 79 aircraft in November.
Chief Financial Officer Greg Smith said last month that deliveries would rebound in the last two months of the year despite supply delays in engines and other components.
The company’s deliveries could take a hit if Indonesia’s Lion Air decides to cancel orders for Boeing’s 737 MAX jets following a crash that killed 189 people in October.
Lion Air, a privately owned budget airline, has 190 Boeing jets worth $22 billion at list prices waiting to be delivered, on top of 197 already taken, making it one of the US manufacturer’s biggest export customers.