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LME Lead Prices Advance Slowly, but Resist Declines during Chinese New Year
Feb 19,2013 15:51CST
smm insight
Source:SMM
Most investors predicted before the Chinese New Year holiday that LME lead would lead gains among base metals during the holiday.

SHANGHAI, Jan. 19 (SMM) – Most investors predicted before the Chinese New Year holiday that LME lead would lead gains among base metals during the holiday. Instead, LME lead mostly moved within the range of USD 2,390-2,440/mt, hovering between the 10-day and 20-day moving average. 

With European politicians becoming increasingly concerned about a strong euro, the exchange rate of euro became the key topic during the Eurogroup meeting held in Brussels on February 11, 2013. Germany remained entrenched in its opposition to exchange rate intervention, emphasizing that exchange rate should be decided by markets. France, on the other hand, believes the euro’s exchange rate should be guided. The divergence in opinions sparked fears that the euro may weaken. In this context, LME lead dived to USD 2,390/mt from USD 2,430/mt. However, LME lead later recovered earlier losses and rose to USD 2,420/mt after the US dollar index dropped to 80.         

Investors were staying cautious in the middle of last week as finance ministers and central banks from the Group of 20 would meet in Moscow amid growing worries over a currency war. The euro was in correction and most base metals prices were soft. LME lead also moved weakly between USD 2,410-2,435/mt. The worse-than-expected 4Q GDP in the euro zone and its major economies failed to drag LME lead prices down, though. This is mainly because the US initial jobless claims ended February 9 were lower than expected at 341,000, partly offsetting negative impact bought by depressing GDP in the euro zone. 

Although fiscal and debt issues in the US remain unsolved, the long-term capital net inflows in the US grew from USD 523 million to USD 642 million in February, reflecting that investors are confident about US economic recovery. Besides, the February New York Fed manufacturing index and University of Michigan Consumer Sentiment Index both improved, adding steam to economic recovery in the country. The G20 meeting did not pay too much attention to the earlier anticipated depreciation of the yen. Positive economic figures from the US drove LME lead up to USD 2,450/mt from USD 2,410/mt.

To sum up, LME lead prices advanced slowly during the holiday, but were resilient to declines. The central banks of Australia, the UK and US will announce the minutes of their last interest rate meetings, which will provide guidance to the US dollar index in the short term. 

 

LME lead prices
Chinese New Year

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