SHANGHAI, Jul. 12 (SMM) – The apparent Fed disagreement on further economic stimulus reflected in its June interest rate meeting minutes pushed the US dollar index to 83.610, a two-year high, eroding the space for commodities prices to climb. LME aluminum dropped to a low of USD 1,895/mt as short selling increased, with total positions adding 2,596 lots to 710,109 lots. The light metal recovered slightly at the trading tail before closing down USD 8.8/mt or 0.46% at USD 1,901.3/mt, but was also the only metal that weakened on Wednesday. Latest LME aluminum stocks were down 11,800 mt at 4,811,050/mt.

The staying strong US dollar will continue to reign in rebound of commodities. LME aluminum is expected to be blocked at the 10-day moving average and find only weak support at USD 1,900/mt. Its trading band is projected at USD 1,885-1,925/mt. The most active SHFE October aluminum contract should open near RMB 15,520/mt and meet heavy pressure at the 5-day moving average as it hovers within RMB 15,450-15,580/mt. Slightly negative fundamentals will continue to drive selling, but weak buying means spot discounts of RMB 30-70/mt will still be seen. Trading should stay quiet.