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Wiedeman, governor of Germany’s central bank hinted yesterday that the ECB may consider lowering interest rate if the euro zone economy worsens again. Investors turned to the safety of the US dollar, sending the euro down over 1%. Newly appointed Financial Minister of Cyprus said its government is planning to sell some gold reserves in the next few months. The US Fed’s beige book report shows the US economy has been growing slowly since late February, driven mainly by booming construction sector in most regions and rising housing prices. Besides, manufacturing in most regions is also recovering steadily, especially construction and auto-related industries. Consumer spending also keeps growing, but was partly constrained by rising gasoline prices, which pushed the US dollar index up 1.02%.
According to the Standing meeting of the State Council held yesterday, the Chinese government will continue to maintain its prudent monetary policy and proactive fiscal policy, focusing on expanding domestic demand. Efforts should be made to cancel and adjust administrative approval projects and deepen reform in tax and prices of resource-related products. The closing prices of the RMB against the US dollar and its central parity rate both hit a new high for a fourth straight day.
The IMF predicts a 3.3% growth in the global economy in 2013, down 0.2 percentage point from its earlier forecast. Markets are now eyeing the G20 meeting. Monetary policy may the focus of the meeting and the US dollar will likely advance further.
LME copper should move within USD 6,850-7,000/mt during the Asian trading hours on Thursday. The Shanghai Composite Index will plunge, keeping SHFE 1308 copper contract in check within RMB 50,000-51,500/mt. In spot markets, spot copper prices will drop along with SHFE copper, enticing downstream producers to go bargain hunting. Cargo holder will hold back goods, with spot copper premiums expected between RMB 250-350/mt against SHFE 1305 copper contract.
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