ASIA METALS - Base metals stay checked by strong US dollar, China absence

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Vivian Teovivian.teo@fastmarkets.comJoint News Editor - Asia

Singapore 06/10/2016 - Base metals on the London Metal Exchange continued to see little action during trading hours on Thursday as the stronger US dollar checked price gains while Chinese investors remained away for national day holidays this week.

The LME three-month copper price was last at $4,798 per tonne, down $1.50 from Wednesday’s close. Only around 70 lots have changed hands so far in the day.

The US dollar index continued to hold above 96 as the US continued to release stronger-than-expected economic data. The index was last at 96.18 on Thursday, up 0.03 percent from Wednesday’s close.

The US final services PMI for September came in at 52.3, above the 51.9 estimate. ISM non-manufacturing PMI over the same period stood at 57.1, besting the economic consensus of 53.1.

Factory orders month-over-month in August ticked up 0.2 percent, with speculation pegging the number at -0.4 percent.

The ADP non-farm employment change at 154,000 jobs was, however, below the forecast of 166,000. While the figure is seen as a preview to the official jobs report due later on Friday, expectations are still for the official number to reach 172,000, up from August’s reading of 151,000.

“In sum, the economy is improving into Q4, which should provide the FOMC confidence to raise rates in December,” ANZ Research said on Thursday morning.

The strong US data has recently increased market expectations of a US rate hike within this year. With no October meeting and a presidential election approaching, December is widely seen as the last possible time for the Fed to restart interest rate normalisation this year – market participants reckon there is a 60-percent chance of this happening, according to the CME Group FedWatch Tool.

In other commodities, the Brent crude oil spot price fell 0.13 percent to $51.52 per barrel, and the Texas light sweet crude oil spot price slipped 0.34 percent to $49.47 so far on Wednesday.

In equities, the Dow Jones Industrial Average rose 0.62 percent to close at 18,281.03 on Wednesday.

In other LME metals, aluminium eased $8.50 to $1,666.50, while nickel rose $10 to $10,090. Zinc slipped $1.50 to $2,341.40, while lead increased $3 to $2,048.
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