The dip in metal prices attracts buying London 03/07/2013 - The metals tried to build on Monday’s gains and at the highs of the day yesterday the base and precious metals were up an average of 1.2 percent, but they closed in a jumbled fashion, with base metals net unchanged, but with tin up 0.5 percent at $20,006 and copper off 0.5 percent at $6,928, while silver was down 1.3 percent at $19.40, gold was off 0.8 percent at $1,243 and palladium closed up 0.5 percent. In Shanghai the base metals are mixed, copper has put in a solid 0.9 percent gain to Rmb 50,670, zinc is up 0.2 percent at Rmb 14,610, aluminium is up 0.1 percent at Rmb 14,385 and lead remains the laggard, it is off 0.1 percent at Rmb 13,935. Rebar is up 1.3 percent at Rmb 3,506, helped by a recovery in iron ore prices, while gold is off 0.7 percent at Rmb 252.65/g. The metals generally seem to be holding up well considering the strength of the initial rebound and the stronger dollar and it appears as though the pull-back late yesterday is prompting some buying too. US vehicle sales are certainly a bullish development and that bodes well for US demand. On balance, given how oversold the markets became in recent weeks we would not be surprised to see further short-covering, but with China looking weak, we would not get too comfortable with the rallies as we expect producer selling will cap them before too long. Potential events that might bring a quicker than expected end to this rebound include developments over Greece and whether they qualify for their next bailout payment and there is a danger that today’s European non-manufacturing PMI disappoints the market. ++++++++++++++++++++++++++++++++++ Stay long USD vs CNH - American Bank After a steady rise over the past tradin days, the USD/CNH corrected sharply lower last Friday on market talk of a potential CNY band-widening, FX Strategist. He is in disagreement with the latest kneejerk market response, saying that "if the authorities do widen the band the intention will be to signal increased flexibility in the currency, not to increase the scope for the currency to appreciate." He adds that, in any case, "the signal from the recent pattern of fixings is that the idiosyncratic bias in USD/CNY lower is over, and from here on in the fixings should drift higher, or at least more closely track the DXY." The JP Morgan Strategist recommends to stay long USD/CNH 12m "on weaker inflows going forward, further position reduction, and on some catch-up with the rest of USD/Asia."
Posted on: Wed, 03 Jul 2013 07:55:04 +0000
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