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The dollar index, at 95.22 as at 9.42am Shanghai time, is down from a high of 95.38 last Friday on the back of some disappointing data releases from the United States at the end of last week – see data section below.
While news that the People’s Bank of China announced an increase in the reserve requirement for trading forward foreign exchange to 20% also dented the dollar’s recent rise against the yuan.
The USD/CNY fell in early trading on Monday, reaching a low of 6.7979 during the morning session, compared with a high of 6.8935 last Friday.
But gains across the complex have been fairly muted so far this morning, with trade tensions between the US and China continuing to rumble on, keeping investors cautious.
In a further escalation in the tit-for-tat trade spat between the world’s two biggest economies, the Chinese government announced last Friday that it would impose tariffs on $60 billion worth of US goods if the North American nation did not halt its pending penalties on Chinese imports.
The Chinese Commerce Ministry said in a statement it could add duties of 5, 10, 20 or 25% on 5,207 types of US imports, while warning it could adopt further countermeasures at any time. These proposed tariffs cover US metal products including copper concentrates.
Nickel was the outperformer of the SHFE base metals complex this morning, with the metal’s most-traded November contract rising to 110,030 yuan ($16,104) per tonne as at 9.42am Shanghai time, up 920 yuan per tonne or 0.8% from last Friday’s close.
In addition to the weaker dollar, declining stock levels and strong consumption continue to compound a broadly bullish environment for nickel.
“So far in 2018, net nickel stocks in SHFE-approved sheds have declined 57%. [London Metal Exchange] stocks are on the same path, registering fresh lows and declining 30% since the start of the year,” according to Metal Bulletin analyst Andy Farida.
“Additionally, a strong rate of consumption is also a factor behind the growing deficit in the refined nickel market. The [International Nickel Study Group] found consumption had grown 9.7% so far in 2018, with Asia leading the momentum at 12.7%, followed by Africa at 5.2% and Europe with a 2% increase,” Farida added.
Elsewhere, ongoing labor unrest in South America, including a strike at the world’s largest copper mine by production, Escondida, failed to provide much support to the red metal’s prices this morning. The most-traded September copper contract on the SHFE edged up by just 0.1% as at 9.42am Shanghai time.
Base metals prices
Data releases and currency moves