US dollar index remains at a low level, while BC copper rises strongly [SMM BC copper commentary]

Today, the most-traded BC copper 2508 contract opened at 70,910 yuan/mt, closing the day with a positive candlestick, indicating an increase in long positions. During the night session, the most-traded BC copper contract initially dipped to the intraday low of 70,820 yuan/mt, followed by a period of fluctuating rangebound. After the day session opened, the center of copper prices continued to rise, reaching an intraday high of 71,950 yuan/mt near the close. It ultimately closed at 71,850 yuan/mt, up 750 yuan/mt from the previous close, representing a 1.05% increase. Open interest reached 5,495 lots, an increase of 314 lots from the previous trading day, with trading volume reaching 4,380 lots. On the macro side, market expectations for an early interest rate cut by the US Fed continue to strengthen, with CME FedWatch indicating a 21% probability of a 25BP rate cut by the Fed in July. The expectation of an interest rate cut would reduce the attractiveness of US dollar-denominated assets, prompting investors to shift funds to other more attractive assets or currencies, thereby driving down the US dollar index and supporting copper prices.

The SHFE copper 2508 contract closed at 80,640 yuan/mt. If we consider the most-traded BC copper 2508 contract closing at 71,850 yuan/mt, its after-tax price would be approximately 81,191 yuan/mt. The price spread between the SHFE copper 2508 contract and the BC copper contract is -551, maintaining an inverted spread and narrowing compared to the previous day.