While there was a weaker tone throughout the LME complex on Thursday as fears of interest rate rises undermined equities markets, nickel was the greatest loser after the LME stepped in to improve nearby liquidity. On a closing basis aluminium posted only a narrow loss after first climbing to a high of 2774 before falling back to 2730, with the 200-day moving average cushioning the fall.
Nearby spreads were unchanged, while forward rates were up to $1.50/mth easier in H1 2008 and only fractionally so elsewhere. The LME’s WC warrant banding report remained void.
The markets-wide fear of further interest rate rises set off a ‘dash for cash’, with money flowing out of equities, bonds and other securities, in turn (illogically) dragging commodities lower. As such, the dollar rose strongly on Friday morning and pressured the LME complex once more. Aluminium had at time of writing sunk from an overnight high at 2744 to 2707 currently, breaching the 200-day MA c. 2725 and Cliff Green Consultancy’s noted support at 2730.
The trading strategists in last night’s report suggested that a ‘clear and sustained’ break could trigger falls towards the ‘more important’ 2660 area. Last at 2710, volumes good at 2,700 electronic lots traded via Select.
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