SHANGHAI, Feb. 13 -- After Greek leaders finally reached an agreement to avoid default, the euro surged on Thursday to a two month high against the US dollar of 1.3320. Although implementation of the second round of the bailout plan will take time, expectations are high that the euro will rise in the short term. The European Central Bank also decided to leave interest rates unchanged, a sign that the euro zone economy is stabilizing. Technically speaking, power of longs is slightly stronger than shorts at present. Both daily and weekly RSI indicators and all moving averages suggest an upward trend. Generally speaking, profit-taking may occur in the coming week following positive news from the euro zone, but LME nickel prices should continue to rise as well. However, since any positive impact from the euro zone has already been absorbed by markets and since prices are still meeting resistance, any increases in LME nickel prices will be limited. SMM expects LME nickel prices will test USD 22,450/mt if able to break through resistance at USD 22,000/mt, and will be supported at USD 21,100/mt and at the 10-day moving average.
In the Shanghai nickel spot market, a small number of traders already began to replenish stocks last week. Since LME nickel prices are expected to rise, the willingness by downstream enterprises to purchase raw materials will grow and boost transactions. Last week’s spot nickel prices were below LME nickel prices and the price spread between domestic and LME nickel prices expanded last week, but should narrow if downstream demand improves in the coming week. SMM expects spot nickel prices will continue to follow LME nickel price trends and will move between RMB 140,000-155,000/mt in the coming week.