LIVE FUTURES REPORT 10/07: SHFE base metals prices mixed on dollar strength; copper down on macro uncertainty

Base metals prices on the Shanghai Futures Exchange were on divergent paths in morning trading on Wednesday July 10 amid US dollar strength and macroeconomic uncertainties.

The dollar index rose by 0.02 to 97.53 as at 9.40am Shanghai time, posing sell-off risk among investors.

“Markets are less hopeful of a sharp interest rate cut this month, and trade war and Brexit concerns are back on the rise,” according to ANZ Research.

“St Louis Fed Reserve President, James Bullard, said he didn’t think a 50bp (basis point) cut was in order, but would be willing to go 25bp,” ANZ Research added.

Along with dollar strength and anticipation of a mild rate cut by the US Federal Reverse, simmering trade tensions between Japan and South Korea played havoc on investors’ appetite.

“While global markets have focused on the trade war between the United States and China, trade tensions have also been rising between Japan and Korea,” ANZ Research said.

“Japan is restricting the trade of tech goods to South Korea, and a tit-for-tat response is expected. Japan has removed South Korea from its ‘white list’ of countries that it deems to have trustworthy export controls,” ANZ Research added.

Copper took a notable toll from the negative macroeconomic environment, with the most-traded September copper contract on the SHFE declining by 280 yuan per tonne ($40) - or 0.6% - from Tuesday’s close to 45,910 yuan per tonne as of 9.40am Shanghai time.

“Fundamentals are not playing much of role in the red metal’s price performance. Rather, it’s the macroeconomic situation that has been defining the copper price recently, with the price rising if there’s improvement in the macro situation, and it declining if aggravation in the macro situation occurs,” according to Jinrui Futures.

Other highlights

  • The most-traded August aluminium contract price rose to 13,770 yuan per tonne as of 9.40am Shanghai time, up by 25 yuan per tonne from Tuesday’s close.
  • In notable data today, notes from the Federal Open Market Committee’s latest meeting and Gross Domestic Product numbers from the United Kingdom are set to be released.
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