SHFE aluminium to swing widely

SHFE 1609 aluminium will swing widely between RMB 12,220-12,420/mt, due to short covering at lows and profit taking by longs at highs.

LME aluminium will move at USD 1,600-1,615/mt.  

In east China’s spot aluminium market, spot premiums of RMB 160-200/mt are expected over SHFE 1608 aluminium contract.

Key macroeconomic indicators for base metal prices

The Bank of Japan will announce its interest rate decision today. Base metal volatility will rise today.

Germany’s flash July CPI improved noticeably, with growth the most significant over the past month. But eurozone July expected inflation slid from June, while expected PPI also fell. As such, eurozone July’s flash CPI will unlikely improve sharply, and this will grow market expectations that the European Central Bank will expand its easy monetary measures.

US Q2 GDP is expected to improve significantly. US retail sales in Q2 showed noticeable turnaround, and labor market was also strong, boding well for US Q2 GDP.

Eurozone annualized Q2 GDP will be affected by UK’s vote to leave the EU, and this is expected to trigger additional stimulus measures by the European Central Bank.

Japanese Prime Minister announced they will push JPY 2.8 trillion stimulus program this week, growing market expectations that the Bank of Japan will release easy monetary measures in the near term. Should the bank leave rate unchanged, the exchange market will face rising volatility.

The US dollar index is expected to return to upward track and weigh on base metals.