Stronger dollar still weighing heavy on aluminium prices
25-May-2016
AL Circle
Aluminium price, though inched higher, is yet to get its sheen back due to a stronger dollar and higher Fed rates.
Higher US rates could mean a stronger US dollar, which has a negative effect on commodities demand because it makes them more expensive for buyers paying with other currencies.
A Fed official on Monday said US interest rates being kept too low for too long could cause financial instability -- the latest in a line of policymakers hinting that a June rate increase is on the table.
"The market is now pricing in a significant possibility of a rate hike next month, depending on data," said Peter Fertig, a consultant at Quantitative Commodity Research.
"The China situation isn't as dire as markets think, but the strength we saw in March is unlikely to continue."
Latest China data souring the mood included copper exports that surged by 38 per cent to 32,371 tonnes while refined imports rose by only 3.7 per cent to 341,677 tonnes.
Three-month aluminium bucked the weaker trend, rising 0.5 per cent to end at $US1,554 a tonne.
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