SHANGHAI, May 23 (SMM) – LME nickel price overnight opened at USD 15,049/mt, with the high end of the price range USD 15,339/mt, and finding support at USD 15,046/mt. Finally, LME nickel prices closed at USD 15,180/mt, up USD 154/mt from the previous trading day. Trading volumes increased by 1,615 lots, to 4,053 lots, and total positions decreased by 1,743 lots, to 111,432 lots. Inventories grew 840 mt, to 178,758 mt.

As two US Federal Reserve officials statement expressed their support for QE, the US dollar index increases were refrained, boosting LME nickel prices to break through the 10-day moving average. Bernanke stated the Fed will likely scale back assets purchasing, so the US dollar index overnight closed the day with gains. In this context, LME nickel prices rolled back early gains and closed at USD 15,180/mt, up USD 154/mt.

US Federal Reserve Chairman Bernanke's speech last night came under the spotlight. Bernanke explicitly expressed support for QE3 in his testimony, boosting market sentiment and helping US stocks hit a new record high. Nevertheless, during the Q&A session, Bernanke said that the FOMC may scale back asset buying during policy meetings to come and that whether or not to curtail bond purchases depends on how economy evolves. The minutes of the May policy meeting indicate that a majority of Fed officials are in favor of using future economic data as the basis for deciding whether to slash accommodative monetary policy or not. In response, US shares pulled back from high levels and ended in negative territory. The US dollar index rebounded to hit a fresh high since July 2010. The US existing home sales were 4.97 million units in April, missing forecasts and weighing on base metal prices.       

Retail sales in the UK surprised markets with a 1.3% drop in April, the biggest decline since April 2012. As widely expected, Bank of England (BOE) Governor Mervyn King called again for an extra 25 billion pounds of asset purchases. His appeal was echoed by Paul Fisher and David Miles.

According to the minutes of the interest rate meeting by the Bank of Japan (BOJ), the BOJ will continue to expand monetary by JPY 6-7 trillion each year and keep interest rate unchanged at 0-0.1%. Meanwhile, the BOJ revised the country's current economic situation as “on the rise, a fifth straight month of hike in economic situation assessment. This sent Nikkei soaring 1.6% to a 5-1/2-year high. 

The central parity rate of RMB against the US dollar was 6.1904 yesterday, up 7 basis points from previous day's 6.1911. The US dollar strengthened against weakening of a basket of other currencies (except RMB). The People's Bank of China (PBOC) has cut intervention in exchange rate market, which is conducive to ease pressure from increased money supply. However, strengthening central parity rate of yuan will raise expectations for RMB appreciation and attract more capital. The PBOC issued RMB 10 billion in bills on Tuesday and RMB 9 billion in 28-day repurchase. The PBOC will issue another RMB 6 billion in bills today. With capital continuously flowing into China, bill issuance and repurchase alone are only a makeshift.   

In other markets, the US dollar index gained 0.54%. US equities closed down across the board, whereas Asian stocks were mixed. All LME base metals ended in positive territory. 

LME nickel prices should move between USD 14,900-15,300/mt today, and spot nickel prices in Shanghai are expected to stand at RMB 105,000-107,000/mt.