With the news in Australia focused on either the upcoming Federal election or todays RBA interest rate decision, it is also worth noting that the AUD/USD exchange rate has been busy this week falling from 92.5 on July 29 to 89.14 today. With some economists predicting the dollar could fall towards 80 cent, there is hope that the local manufacturing industry will start to be competitive on exports, giving a much needed boost of demand.
In other news a US senate committee has turned its attention to the behavior of US banks in LME warehousing. Last week reports surfaced that the banks are deliberately delaying the release of LME metal out of warehouses to increase their rental income. On Monday a lawsuit was commenced against Goldman Sachs for “alleged anti-competitive and monopolistic behavior in aluminium storage”. One potential effect of the attention and lawsuits will be the reduction of metal in LME warehouses which may cause a short term increases of supply into the market.
**** DJ MARKET TALK: LME Metals Little Changed; Mood Cautious -Newedge ****
0841 GMT [Dow Jones] LME base metals are little changed, treading water as investors digest a string of economic indicators over the past few days. While this weekend’s HSBC China purchasing managers’ index services data showed economic expansion in July, US nonfarm payrolls missed expectations Friday. China’s official PMI data, released last week, also showed expansion. “Although the China manufacturing and service industry PMI both show the economy is stabilizing, the lousy summer holiday mood might give both bulls and bears a bit more time to be confident enough to make any investment,” says Richard Fu, head of Asian commodities trading at Newedge.