The Federal Reserve's Hawkish Remarks Put LME Zinc Under Pressure And Opened Lower

Overnight, the minutes of the Federal Reserve's discount rate meeting from May 22 to June 14 showed that the governors of the four regional Feds (Cleveland, Richmond, St. Louis and Dallas Fed) sought to increase the discount rate by 25 basis points; The small business confidence index recorded 91, expected to be 89.9, and the previous value was 89.4, a new high since November 2022; the ZEW economic sentiment index in Germany and the euro zone in July hit a new low since December 2022; some small and medium-sized banks and foreign banks , the interest rate of some US dollar deposits on sale (the "interest rate" in the article refers to the "annualized interest rate") is still above 4%, and the interest rate of some US dollar deposit products with relatively high deposit thresholds exceeds 5%. Many experts predict that the US dollar deposit rate will face downward pressure in the future; data from the China Association of Automobile Manufacturers shows that car sales in June increased by 4.8% year-on-year, and increased by 27.9% in May. Sales of new energy vehicles in June increased by 35.2% year-on-year.

Overnight, LME Zinc opened at US$2359/ton. After the opening, LME Zinc fluctuated all the way down, and the European trading hours price turned downwards. It rebounded slightly in the night market, and finally closed at US$2,371/ton, an increase of US$16.5/ton. 0.7%, the trading volume increased to 7,392 lots, and the open interest increased by 543 lots to 185,000 lots. LME Zinc recorded a long upper shadow column overnight, and the upper part penetrated the middle track of Bollinger Road. LME inventories decreased by 575 tons to 72,925 tons, and LME inventories recorded a decrease. Affected by the weakening of the US dollar, the trend of LME zinc was relatively strong in early trading, but the ZEW economic sentiment index in the euro zone hit a new low in July, and the subsequent Fed’s hawkishness put pressure on LME zinc, and LME zinc stepped out of the inverted "V" trend.

Overnight, SHFE zinc main force 2308 contract opened lower at 20,140 yuan/ton, and after the opening, it fluctuated sideways below the daily moving average, and finally closed at 19,975 yuan/ton, down 165 yuan/ton, or 0.82%, and the trading volume decreased to 81,900 lots, positions decreased by 1,802 hands to 108,000 hands. SHFE Zinc recorded a small negative column overnight, and the bottom is close to the middle rail of Bollinger Road. Affected by macro sentiment and the external market, SHFE Zinc opened lower, but the center of gravity basically remained oscillating around 20,000. The market is waiting for the Fed's inflation data, and still needs to be vigilant about basically putting pressure on zinc prices.

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