Commodities weaken in European session as USD rebounds against major currencies. Sepculations of Fed's resumption of quantitative easing recede ahead of today's FOMC meeting. While there have been more evidence on a US slowdown, the market began to anticpate that policymakers may not announce anything new other than a more dovish statement at today's meeting. WTI crude oil price drops to 80.5 after faltering below 82 while gold extends yesterday's decline to levels below 1200.

China's trade data for July showed widening in trade suplus as deceleration of import growth outpaced that of exports. Export growth slowed to +38.1% y/y in July from +43.9% y/y in the prior month while import growth decelerated to +22.7% y/y from +34.1% y/yin June. On a seasonally adjusted monthly basis, exports rose +1.2% (June: +4.2%) while imports contracted 5.6% (June: +0.9%).

With the exception of copper, slowdown in import growth was seen in all major categories. Imports of crude oils tumbled to +7.9% y/y in July after jumping +81.8% y/y in June. From a month ago, imports contrated -17.9% m/m in July. Imports of iron ore expanded +68.8% y/y, slowed from +75% y/y in June. Imports for copper surged +11.8% y/y during the month, following a mild +1.1% in the prior month.

Decline import growth signals China's economy continues to slow and this may weigh on commodity prices. While the governemnt pledged last month to resume stimulus measures in the second half, we do not believe this set of trade data would trigger any move.


On the precious complex, decline in PGMs has been sharper than gold and silver over the past few days as possible deal between Impala and the labor union reduces the threat of labor strike. Auto sales in Asian countries were mixed. In China, sales of passenger cars to dealers grew +13.6% y/y to 946.2K units in July. On monthly basis, sales contracted -9.3%. The disappointment was driven by a traditionally-weak summer, strong base effect and concerns over economic growth.

In India, sales of passenger cars surged +38% y/y to a record high of 158.8K in July. According to the Society of Indian Automobile Manufacturers, overall economic growth has boosted consumer confidence and 'demand is likely to continue in coming months.