The metals put in a choppy performance on Friday, in the morning they generally pushed higher, with average gains at the highs of 1.5 percent, but then ended the day up an average of 0.8 percent. The fact the dollar stabilised seemed to suggest that the market was comfortable about the Greek rescue package, but not overjoyed about it. This morning the markets are focussed on the US debt ceiling and the uncertainty surrounding that has caused some jitters, enough at least to push gold to a new high at $1,622.20. Greece’s credit rating has also been marked down further by Moody’s. The base metals are in retreat mode with average losses as of 07:25 BST of 0.7 percent, zinc leads the pull back with a 1.3 percent drop to $2,452, copper is down 0.5 percent to $9,631 and aluminium is down 0.7 percent at $2,572. Volumes have been average at 4,108 lots, 1,594 of which have been copper. Despite concerns over the US debt, the dollar is treading water around the 74.20 level on the dollar index, although the commodity currencies seem to be the strong ones as investors look to diversify away from the dollar and euro. The aussie is at 1.0820, the Canadian is at 0.9517, the euro is at 1.4366, sterling is at 1.6307 and the yen is at 78.38. Gold is last at 1618 and silver is at $40.67. Equities – the Dow closed down 0.3 percent on Friday, but this morning Asia is weaker. The Nikkei is down 0.8 percent, the Hang Seng is down 0.7 percent, the MSCI Asia Apex is down 0.8 percent, but China’s CSI 300 is down a hefty 2.7 percent. So despite generally good earnings out of US companies, the markets seem focused on the macro issues. Data out today is light with UK mortgage approvals and Belgium business climate data out, so this will give the markets the opportunity to focus on the fundamentals and the macro picture. In Shanghai the October contracts are down an average of just 0.2 percent, copper is down 0.4 percent at Rmb 71,640, lead is down the same at Rmb 17,550, zinc is down 0.3 percent at Rmb 18,620, while aluminium is up 0.4 percent at Rmb 17,655. Spot copper in Changjiang is off just 0.1 percent at Rmb 71,250-71,550, so remains in a small contango, while the LME/Shanghai arb remains negative at $190/tonne. On balance the base metals do seem to be holding up relatively well considering the conditions in the broader market and poor PMI data out of late. This morning the base metals are down by around the same extent as the equities, which suggest some risk reduction, while money is rotating into safe-haven assets, notably the precious metals and commodity currencies. If the markets become increasing nervous, which we think there is a good chance of, then we would not be surprised to see the base metals pull back further. We doubt the US will default, but the political impasse may well prompt some negative comments from the rating agencies.

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