SHANGHAI, Jul. 5 (SMM) – The Bank of England announced overnight it will keep interest rate unchanged. Draghi, President of the European Central Bank (ECB) claimed the ECB will keep low interest rate in place for a long time to come and may even cut interest rate further. He added that the European economy is still facing downward risks, causing the euro to shed 0.7% while pushing the US dollar up. European stocks gained 2.3%, though. LME copper market was quiet as US stock market was closed for the Independence Day and since investors are awaiting Friday’s US non-farm employment report. As a result, LME copper slid to USD 6,917/mt before closing at USD 6,925/mt, losing more than 1%. This marks the third day in a row that LME copper failed to break through USD 7,000/mt.
European currencies weakened as Bank of England and European Central Bank expressed they will use easing policies after interest rate announcement. The Bank of England maintained interest rates and QE scale unchanged, expressing the inflation rate will likely fall to the 2% target, and concerning rising interest rates will hit economic recovery; European Central Bank also maintained re-financing interest rates, deposit interest rates and loan interest rates unchanged at 0.5%, 0% and 1%, respectively, reiterating it is open for negative interest rates, pushing up the US dollar index by 0.5.
China's Ministry of Finance (MOF) decided to implement national treasury cash management commercial bank fixed term deposit (the fourth and fifth) totaling RMB 100 billion. Nearly RMB 400 billion deposit reserve will be drained from the market, and RMB 300 billion will be withdrawn in July. The move by the MOF will help ease liquidity tightness.
US financial markets were closed, and major European stocks generally rose by over 2%; LME base metals prices dropped.
A lack of massive buying and weak euro will keep LME copper in check within USD 6,900-6,990/mt during the Asian trading session on Friday. China’s A-shares will remain high, and SHFE 1310 copper contract will fluctuate between RMB 49,800-50,500/mt after a low opening. In spot market, cargo holders will be more willing to sell. High-quality copper will gain favor. Spot discount of RMB 0-50/mt and premium of RMB 0-50/mt are expected over SHFE 1307 copper contract prices.