US Dollar Strengthens, LME Zinc Under Pressure [SMM Zinc Morning Comment Oct 10]

SMM, Oct 10: Overnight, the US Fed meeting minutes showed a split on the rate cut path; Daly indicated there might be one or two more rate cuts this year; North Korea announced a permanent cut-off and blockade of the southern border with South Korea; US officials believe Israel accepts the argument of striking Iran's conventional military targets; OpenAI is expected not to achieve profitability before 2029; the Ministry of Finance will introduce measures to enhance counter-cyclical fiscal policy adjustment on October 12; China and the EU will continue consultations on the electric vehicles anti-subsidy case; Guotai Junan and Haitong Securities resume trading today.

Overnight, LME zinc opened at $3,082.5/mt, initially fluctuating along the daily moving average, briefly rising to a high of $3,109.5/mt during European trading hours. Subsequently, bulls reduced positions, and LME zinc fluctuated downward, hitting a low of $2,977.5/mt during the night session, finally closing down at $3,032.5/mt, a decrease of $44/mt, or 1.43%. Trading volume fell to 14,258 lots, and open interest decreased by 283 lots to 261,000 lots. Overnight, LME zinc recorded a large bearish candlestick, with LME inventory increasing by 1,625 mt to 244,025 mt, an increase of 0.67%. After the Fed meeting, expectations for a US rate cut in November weakened significantly, strengthening the dollar and putting pressure on base metals, with LME zinc shifting downward. Attention is on the US CPI data tonight.

Overnight, the most-traded SHFE zinc 2411 contract opened at 24,900 yuan/mt. Initially, bulls reduced positions, and SHFE zinc fluctuated downward to a low of 24,650 yuan/mt. Later, shorts reduced positions, and SHFE zinc fluctuated upward, reaching a high of 24,935 yuan/mt at the end of the session, finally closing down at 24,865 yuan/mt, a decrease of 175 yuan/mt, or 0.7%. Trading volume decreased to 90,166 lots, and open interest decreased by 2,478 lots to 114,000 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the 5-day moving average forming resistance above. Macro sentiment weakened, the ferrous metals market returned to a downward trend, and with the weakening of Fed rate cut expectations, base metals broadly declined, with SHFE zinc shifting downward. SHFE zinc is expected to fluctuate today.