SHANGHAI, Apr. 7 (SMM) -- LME nickel prices opened at USD 25,246/mt and closed at USD 24,675/mt, with highest price at USD 25,300/mt and lowest price at USD 24,425/mt. Daily trading volumes were 2,329 lots, and positions were 103,095 lots.
US dollar index rose yesterday, and LME nickel prices reversed previous gains as a result. Australia's central bank further raised interest rates yesterday, and the Australian Treasurer Swan said the increased benchmark interest rate at 4.25% was still below pre-crisis levels. With the Australian economy gradually picking up, the central bank will adjust the monetary policy month by month in the future and may lift its benchmark interest rate further in the future. The strong demand for resource products helped the economy recovery in Australia move faster, but it doesn't mean such monetary policy can also apply to other crisis-affected countries and regions that mainly rely on manufacturing thin profit goods. Once interest rate was lifted in such countries, the slightly improved economy that boosted by economic stimulus package in 2009 will come back in chaos again.
Recent base metal prices will rise further, and the recovered and consolidated long position sentiment will further push up base metal prices along with the coming of peak demand period. Interest rate hike policy may not likely release in the short term, but it should be cautious of further increase of bank reserve requirement ratio to control liquid flow given the fact that CPI and PPI in March were both higher than expected. Reviewing that the government has already lifted bank reserve requirement ratio for two times and market players were basically insensitive to the news, the possibility that base metal prices will fall further is very small. In this context, long position momentum will have room to rise further.
Although LME nickel pries ended down yesterday, prices still remained above 5-day moving average. Recently, long position sentiment continues, and LME nickel prices are expected to move in the USD 24,650-25,250/mt range today.
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