Commodities Daily - August 2, 2021

> Oil under pressure after positive end to last week; manufacturing PMIs in focus. Today, investors will eye manufacturing PMIs for July from across the globe, with the US ISM index the major highlight. In our view, Brent could retreat back to $74/bbl today, as the July PMIs look set to be mostly downbeat, while the current coronavirus situation is also likely to worry oil investors.> Gold trades lower as dollar strengthens. Gold declined from $1,830/oz to $1,815/oz on Friday amid a slide in EUR/USD from 1.190 to 1.186 and mixed macro data. Bullion is quoted near $1,810/oz as we write. Today, markets await July Markit IHS manufacturing PMI and ISM manufacturing index readings for the US, as well as a Markit IHS manufacturing PMI reading for the eurozone. We expect gold to be range-bound at $1,800-1,820/oz.OIL UNDER PRESSURE AFTER POSITIVE END TO LAST WEEK; MANUFACTURING PMIS IN FOCUSOn Friday, the new October front-month Brent contract gained about $1.30/bbl to as high as $75.65/bbl and eventually settled at $75.41/bbl, fixing $0.31/bbl above the previous settlement. This marked its fourth straight monthly gain. In July, Brent was supported by strong demand in key global economies despite surging cases of the Delta coronavirus strain in recent weeks. One of the upbeat highlights on Friday was that the eurozone economy emerged from recession in 2Q21 as GDP grew 2.0%, beating the 1.5% consensus estimate. (It had contracted 0.3% in the 1Q21 and 0.6% in 4Q20, while this year the ECB forecasts growth at 4.6%, followed by 4.7% next year.) Another positive on Friday was that US consumer spending rose more than expected in June as progress with vaccinations boosted demand for travel-related services. However, part of the increase reflected higher prices, with annual core PCE inflation - which the Fed focuses on - at 3.5% in June, though below the 3.7% Bloomberg consensus estimate. The final major takeaway from Friday was that the EIA monthly report showed US crude production rising to 11.231 mln bpd in May versus a revised April volume of 11.151 mln bpd, with the weekly data suggesting that in July it reached 11.40 mln bpd.This morning, Brent slid to as low as $74.10/bbl before rebounding to $74.70/bbl as the Caixin Chinese manufacturing PMI eased in July to 50.3 points from 51.3 in June, which could point to a slowdown in the economic recovery in 2H21 as risks to growth mount. Meanwhile, the Delta coronavirus strain is clouding the mobility outlook in Asia, where China is seeing a small increase in cases, Thailand is set to expand its semi-lockdown measures and new cases in the hot spot of Sydney matched a record. Today, investors will eye manufacturing PMIs for July from across the globe, with the US ISM index the major highlight. In our view, Brent could retreat back to $74/bbl today, as the July PMIs look set to be mostly downbeat, while the current coronavirus situation is also likely to worry oil investors.Other highlights for this week include services and composite PMIs from around the world, the US ADP employment report, weekly oil and refined product inventory data, retail sales from a number of European countries, the ECB Economic Bulletin, key German and French industrial data, global CPI readings and the July US jobs report due on Friday. We think after a setback early this week, Brent should recover back toward $76/bbl later this week, buoyed by what is expected to be upbeat US oil and refined products inventory, as well as labor market, LD TRADES LOWER AS DOLLAR STRENGTHENSGold declined from $1,830/oz to $1,815/oz on Friday amid pressure from a slide in EUR/USD from 1.190 to 1.186. However, the 10y US Treasury yield also declined, from 1.26% to 1.22%. During the first half of the day, gold was supported by solid macroeconomic data from the eurozone. Eurozone GDP expanded 2.0% Q-o-Q in 2Q21, while only 1.5% growth had been expected, and the eurozone CPI rose 2.2% y-o-y, topping the consensus estimate of 2.0%. This fairly strong batch of data pushed EUR/USD higher and helped gold climb above $1,830/oz. However, the US macro data later in the day mostly put pressure on gold heading into the weekend. US personal incomes increased by 0.1% m-o-m in June, while a 0.3% decrease was expected, and personal spending rose faster than anticipated (by 1.0% versus the expected 0.7%). The University of Michigan's consumer sentiment index also beat expectations, printing at 81.2 in July, above the consensus of 80.8. These signs that the US economic recovery remains on track pushed gold into a lower range. In addition, Anthony Fauci, the director of the US National Institute of Allergy and Infectious Diseases, indicated that he believed enough Americans had been vaccinated to avoid another round of lockdowns. While the core PCE deflator from the US registered only a 0.4% m-o-m increase in June, below the expected 0.6% (the y-o-y reading of 3.5% was also below the consensus, which was 3.7%), the slightly lower than expected inflation reading failed to boost gold, which eventually consolidated near $1,815/oz.Gold is trading near $1,810/oz as we write. Today, the market awaits July Markit IHS manufacturing PMIs for the US and the eurozone and the ISM manufacturing PMI from the US. The highlights further out on this week's macro calendar include the July US jobs report on Friday and the ADP employment report on Wednesday. Also due from the US are factory orders for June, ISM and Markit services PMIs for July, the trade balance for June and weekly jobless claims, while Europe will see the publication of the eurozone PPI for June, the Markit services PMI for July, retail sales for June and the ECB's economic bulletin. We expect gold to be range-bound at $1,800-1,820/oz