SHANGHAI, Jun. 18 (SMM) – Financial Times pointed out that Bernanke may hint the US Federal Reserve is close to bring assets purchasing plan to an end at its June policy meeting, pushing down stocks markets and driving up the US dollar index, with commodity currencies hitting daily lows. But as the writer clarified at noon that the article only represents his own viewpoint, rather than sources from the Fed, stocks markets reversed declines, with commodity prices also rebounding.
LME zinc prices overnight opened at USD 1,851/mt. Asian stocks markets mostly rose during Asian trading hours, boosting market sentiment. Due to short covering, LME zinc prices strengthened to USD 1,870-1,875/mt. But as selling pressure mounted after Asian trading, LME zinc prices rolled back early gains, finding support at USD 1,850/mt. Upbeat US economic data pushed up US stocks markets, driving up LME zinc prices to rebound and close at USD 1,863.8/mt, up USD 3.5/mt or 0.19%.
Trading volumes decreased by 2,220 lots, to 6,543 lots, and total positions decreased by 1,529 lots, to 270,185 lots. LME zinc inventories fell by 3,725 mt, to 1,083,775 mt.
US negotiated with EU at the G8 summit June 17 on the free trade agreement, with the hope of creating thousands of jobs and pushing up economic growth in US and Europe. The official negotiation of free trade agreement will be commenced in Washington in July, which will last for 18 months. The move will give support to US economic recovery. New York Federal Reserve's June manufacturing PMI rose to 7.84, much higher than expectations. The National Association of Home Builders (NAHB) announced that US July housing market index rose to 52, showing market sentiment in the US property market improved. US May construction permits and housing starts data is expected to boost the market and commodity prices.
Bundesbank warned that German economic growth will slow in summer, despite exports, imports and output growth in April shows its economy will strengthen in Q2. Meanwhile, business confidence in May was also positive, and the building industry is also improving, so the Bundesbank's statement leaves room for additional easing policy.
The central parity of RMB against US dollar was 6.1598, up 9 basis points from the previous day, and hitting a record high for four consecutive days since June 7 from the foreign exchange rate reform. But State Administration of Foreign Exchange released the surplus of foreign exchange settlements and sales by banks on behalf of clients were USD 17.2 billion in May, only half of April levels. The RMB continued to appreciate, but attraction to hot money is weakening, when combined with sliding profits of real economies, China's central bank is facing increasing regulation pressure.
LME base metals prices closed with declines except for zinc; the US dollar index slid by 0.03%; the Dow Jones Industrial Average rose by 0.73%; LIFFE gold prices fell by 0.41%.
LME zinc prices will move between USD 1,850-1,880/mt today, and SHFE 1309 zinc contract prices should fluctuate between RMB 14,550-14,650/mt, with spot premiums against SHFE 1309 zinc contract prices narrowing to RMB 60-100/mt.