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Newsletter – China reduces it banking reserve ratios

Newsletter - China reduces it banking reserve ratios

In the overseas markets, China reduced its banking reserve ratios, which will permit the Chinese banks to lend money against less security. This was seen as another attempt to stimulate the economy by the Chinese Government, and questions remain on whether it will be successful.

On the AUD/USD its been a roller-coaster week with the exchange rate getting to 72.5 last week and now currently sitting on 71.40.

 

DJ Copper Prices Shake Off Losses to Notch Higher DJ Copper Prices Shake Off Losses to Notch Higher By Christian Berthelsen and Georgi Kantchev Copper prices shook off losses and turned positive in the last half hour of the trading session Monday, looking past downbeat data to rise in tandem with stocks and oil.

Copper futures were down for much of the session after the tone was set in Asia early Monday. Shares in China dropped sharply as the country’s central bank guided the currency, the yuan, to its weakest level in three weeks, and China’s central bank announced measures intended to stimulate the economy by lowering the amount of reserves banks must keep on hand to ease lending.

Analysts said there was no other fundamental supply-and-demand news in the market to drive prices.

“It’s mostly a move based on strength in equities,” said Bob Haberkorn, a broker at R.J. O’Brien in Chicago.

Fears about the health of the Chinese economy, the world’s second largest, have been a major factor in the commodity-price slump over the last year and the volatility that has churned through financial markets since the start of the year. China is the biggest source of global demand for industrial metals.

Copper prices have rebounded in recent weeks as oil prices have risen, boosting the sentiment across commodities. Analysts, though, caution that there is a lack of clarity about Chinese demand for metals following the country’s recent holidays.

“Investor sentiment has proven fickle, and the long copper position could be threatened by one poor data release from post-New Year China,” said analysts at Barclays. “Sunny skies may be here now, but investors should take caution as fundamentals still look risky.”

 



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