China’s Industrial Production and Crude Oil Prices: Market Focus

China’s industrial production grew 5.4% in November, while crude oil prices slipped. The Eurozone faces economic contraction, and the USD remains strong ahead of key US data.

China’s industrial production steadily grew in November, rising 5.4% year-on-year. This aligned with market expectations and marked a slight improvement from October’s 5.3% growth. Strong performances across several sectors, including manufacturing, electricity, heat, gas, and water production and mining, drove the increase. This indicates an encouraging trend in China’s economic recovery over the past three months. However, the positive industrial growth could not prevent a dip in crude oil prices. By midday in Asia, WTI crude oil fell below the $71 per barrel mark despite an uptick in China’s industrial activity.

What It Means for Europe & US Sessions

The Eurozone continues to grapple with weak economic performance, with the latest flash PMI data signaling a fourth consecutive month of contraction. This economic strain contributed to the euro slipping under the 1.0500 level on Thursday, with further downside risk expected as the day progresses. Manufacturing continues to contract in the UK, while services activity supports the economy. A weak report could lower the pound, potentially pushing GBP/USD under the 1.2600 mark during European trading hours.

US Dollar Outlook

The US Dollar Index (DXY) has gained momentum recently, buoyed by stronger-than-expected macroeconomic data, and today’s upcoming reports could further bolster this trend. The Empire State Manufacturing Index and Composite PMI report, both due later today, will provide key insights into the strength of the US economy. Robust figures could support continued demand for the dollar, keeping it elevated in the forex markets.

China’s Industrial Production and Crude Oil Prices: Market Focus

Key Data Releases for the Day

• Empire State Manufacturing Index (1:30 pm GMT)
• Composite PMI (2:45 pm GMT)

Expectations for the DXY and Gold

If today’s economic reports are strong, the DXY could remain supported, reflecting continued strength in the US economy. This could weigh on gold prices, which have struggled as the greenback strengthens.

Commodity Outlook: Oil and Gold

The release of China’s industrial production data in the oil market added optimism for future demand, but this did not prevent WTI crude oil from retreating below $71 per barrel. Despite China’s strong production figures, geopolitical factors and global supply concerns, including sanctions on Russia and Iran, could maintain upward pressure on oil prices. The outlook remains medium bullish for crude, supported by anticipated growth in Chinese imports into early 2025.

Conversely, gold faces a weak bearish bias as the strengthening dollar potentially pressures the precious metal to lower in the coming sessions.

As the European and US trading sessions unfold, markets will be watching for further data that could reinforce economic recovery narratives in the US, potentially driving stronger demand for the dollar and more pressure on gold. The upcoming reports for the Empire State Manufacturing Index and Composite PMI will be crucial in determining market sentiment, with the dollar likely to remain firm if the data points to continued economic expansion.

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