Overnight, the US dollar surged, accelerating the decline of LME zinc [SMM Zinc Morning Comment Oct 22]

Overnight, a US Fed official stated that if the job market weakens, it may be necessary to accelerate interest rate cuts; sources reported that after Sinwar's assassination, a committee in Doha will lead Hamas; Israel requested the White House to end the Lebanon war; the PBOC lowered the one-year and five-year LPR to 3.10% and 3.60%, respectively; the PBOC conducted the first swap convenience operation for securities, fund, and insurance companies, with an operation amount of 50 billion yuan; the average interest rate reduction for existing mortgage borrowers this year may exceed 1 percentage point.

Overnight, LME zinc opened at $3,090.5/mt. Initially, longs increased their positions, pushing LME zinc to rise along the daily moving average, with the focus shifting to around $3,135/mt. Near the European trading session, it peaked at $3,145/mt. Subsequently, longs took profits and exited, causing LME zinc to plunge, with the focus shifting back to the daily moving average. During the night session, shorts entered and longs exited, accelerating the decline of LME zinc, with the focus shifting again to $3,070/mt, hitting a low of $3,061/mt, and finally closing down at $3,061.5/mt, a decrease of $27.5/mt, or 0.89%. Trading volume increased to 9,986 lots, and open interest decreased by 267 lots to 252,000 lots. Overnight, LME zinc recorded a long upper shadow bearish candlestick, with the 20-day moving average providing support below. Overnight, LME inventory decreased by 1,850 mt to 237,175 mt, a drop of 0.77%, continuing the reduction trend. With the US election approaching, the market is bullish on the US dollar, and the strengthening dollar pressured the overall non-ferrous metals, causing LME zinc to jump initially and then pull back.

Overnight, the most-traded SHFE zinc 2412 contract opened lower at 25,085 yuan/mt. Initially, there was a tug-of-war between longs and shorts, with SHFE zinc fluctuating around the daily moving average. Subsequently, shorts increased their positions, pushing SHFE zinc down, with the focus shifting to 24,845 yuan/mt, hitting a low of 24,815 yuan/mt, and finally closing down at 24,820 yuan/mt, a decrease of 385 yuan/mt, or 1.53%. Trading volume decreased to 53,245 lots, and open interest increased by 1,941 lots to 89,797 lots. Overnight, SHFE zinc recorded a bearish candlestick, with the daily K-line focus shifting down, and the MACD bearish candlestick expanding. Overnight, non-ferrous metals generally declined. On the fundamentals side, refined zinc imports in September increased significantly to 52,700 mt, and October imports are expected to remain high. Social inventory continues to accumulate, and zinc prices are expected to fluctuate downward.