SHANGHAI, Mar. 25 (SMM) – Next week, copper prices will continue to fluctuate. The US Federal Reserve will maintain its ultra-low interest rates at between 0-0.25% as long as the US unemployment rate exceeds 6.5%, and will continue to purchase USD 85 billion in government bonds and MBS each month. The US Federal Reserve lowered forecasts for the US economy for the next three years, but predicted the unemployment rate will continue to fall. The US economy continues to recover and if new GDP and manufacturing data due to be released next week is optimistic, financial markets will receive a short-term boost. The latest PMI data from the euro zone, Germany and France fell short of market expectations, with the German PMI hitting a record low for the year and France's PMI hitting a four-year low. The Cyprus Parliament denied a plan for levying a tax on depositors, which was essential to qualify for EUR 10 billion in bailout funds. The European Central Bank emphasized it would supply liquidity to Cyprus under existing requirements and that it would not make any exceptions to rules for Cyprus. Uncertainties surrounding the Cyprus crisis will likely impact financial markets, with the euro expected to fall to 1.29. LME copper prices should fluctuate lower between USD 7,580-7,750/mt.
China's central bank withdrew capital through open market operation for a fifth straight week following the Chinese New Year holiday, with a total of RMB 1.01 trillion removed. Despite sufficient cash flows, the central bank shifted from reverse repurchasing to repurchasing, and will maintain repurchasing operations for the foreseeable future. The continuous withdrawal of capital is also impacting the Shanghai Composite Index, which will remain volatile in the short term. Trading volumes of SHFE copper contracts exceeded 1 million lots, and total positions also surged by 70,000 lots. Short selling pressure will continue to dominate the market, with SHFE copper prices expected to remain volatile, but consolidate near RMB 55,500/mt.