Sensational data coming from China have been affecting financial market so far. Amid the devaluation of the Chinese Yuan, commodities are going down in value as well, including gold and crude oil, Market Leader reports.
According to Masterforex-V Academy, the Chinese economy has been having a huge impact on the contemporary global economy and finances, which are subject to increasing globalization.
At this point, the market of energy carriers seems to be the biggest losers suffering from the economic slowdown and stock market crash in China. The thing is that China is the world’s biggest consumer of crude oil and other commodities. Therefore, any economic challenges China faces, eventually affect commodities.
The truth is that a cheaper Yuan will make oil import much costlier, which may well result in China cutting its oil import. Amid increasing supply, crude oil is definitely experiencing severe downward pressure as the prices are going down to new local lows.
Indeed, Masterforex-V Academy confirms that the latest oil market plunge has a lot to do with the biggest devaluation of the Chinese national currency since 1994. The market reacted to the news the instant the People’s Bank of China announced it.
The devaluation of the Renminbi is a major bearish factor for all commodity markets, since China is one of the biggest consumers and importers of various commodities. Since the Yuan is now cheaper, the USD-denominated imports are going to be costlier, which will likely push the Chinese importers to cut down on their imports, thereby reducing the overall demand in commodity markets and pushing the prices down.
Masterforex-V Academy reports that after yesterday’s recovery, the Brent and WTI oil futures for September delivery resumed their downward trend. Brent oil started today’s trading session from $50,23/b and broke below the 50 level again to reach $49,95/b.
As for WTI oil, it started today’s trading session from $44,81/b and then dropped down to $44,42/b.
Metals are another group of commodities seeing a market plunge. Aluminum, copper, nickel lost at least 1,6% of their value earlier today. It should be noted that aluminum is currently trading close to its 6-year lows. Zinc, lead and tin lost at least 1,1% of their value over the same reporting period.
As for precious metals, gold lost over 1% of its value earlier today. The current price is around $1093,92 per ounce. Yesterday’s close price was $1109,08 per ounce, which is the highest level since July 21st. Since early 2015, gold has already lost more than 7% of its value. At this point, the gold plunge has revealed the wrong strategy of those central banks that have been keeping and building up their gold reserves.
