Today marks 29 days to Christmas, and the start of the silly season leading into the Christmas public holidays.
On Friday the Chinese Government dropped interest rates for the first time in 2 years in response to the slowing China domestic economy. Although commodity markets rallied on Friday night, they unfortunately handed back the gains last night as traders took the opportunity to sell up prior to the U.S. Thanksgiving holiday and markets reflected on the reason for the rate cut in the first place.
The AUD/USD trades at 86.05
****Copper reverses on renewed China demand worries*** AFR **Reuters
Copper prices slipped, reversing hefty gains from the previous session which followed China’s surprise interest rate cut, as investors focused on the uncertain outlook for metals demand from the world’s top consumer.
Three-month copper on the London Metal Exchange (LME) ended down 0.74 per cent at $US6675 a tonne – slipping from a three-week high of $US6772.50 a tonne touched on Friday after China cut benchmark interest rates in a bid to jumpstart the economy. The market is concerned that the rate cut could mean the economic outlook for China is worsening, and analysts said loosening monetary policy could do little to help metals demand. ”Our China economists felt that the net effect of cutting the deposit rate and raising the ceiling on the benchmark deposit rate was zero, so for depositors there is going to be very little difference in their situation,” said Caroline Bain, senior commodities economist at Capital Economics. ”On the lending side, it will benefit large state-owned Chinese companies but is not going to make a huge difference to smaller private companies. So on balance we are not going to see an upturn in metals demand necessarily because of those rate cuts.”