SHANGHAI, Jul. 11 (SMM) – Investors turned away from the US dollar overnight ahead of the release of the minutes of the US Federal Reserve June policy meeting and Chairman Bernanke’s speech, precipitating a 1.35% fall in the US dollar index. A weaker US dollar helped commodity prices rebound. LME aluminum regained support at the 20-day moving average and hit a high of USD 1,824/mt during the European session, but pared some of its earlier gains at the tail of the session as longs refused to buy prior to the Fed June meeting minutes. Finally, LME aluminum closed at USD 1,818/mt, up USD 25/mt or 1.39%. LME aluminum inventories fell 8,150 mt to 5,425,425 mt, but positions increased 2,176 lots to 772,101 lots. Bernanke stated that loose monetary policy is needed for the foreseeable future given the low inflation in the US. Most Fed officials said QE should not be scaled back until labor market improves further. This drove the US dollar index down further.
A softer US dollar will help the light metal rebound, but weak Chinese economic data will rein in gains. LME aluminum should test resistance at the 30-day moving average and move within USD 1,805-1,845/mt on Thursday. SHFE 1310 aluminum contract will open higher at RMB 14,300/mt, with prices between RMB 14,280-14,370/mt. In spot market, the upside space of spot aluminum prices will be limited by soft demand, with spot discount of RMB 0-30/mt and premium of RMB 0-10/mt expected over SHFE 1307 aluminum contract prices.