As we signed off Wednesday aluminium was trading crabwise c. 2700 in thin volume, awaiting interest rate news from the FOMC meeting at the US Fed. Rates were held unchanged, in line with expectations, providing little stimulus one way or the other, though it was crude oil inventory figures there that provided a spark. A sharp fall in stocks just ahead of an early American cold snap due next week caught traders by surprise and it sent oil and gold prices sharply higher. Among the LME complex, copper failed to respond, though aluminium joined zinc’s strong rally in the afternoon, romping from a lunchtime level of 2720 to an aftermarket high of 2775. Devotees of the Fibonacci numbers reacted to an upward breach of the “0.62% medium term” level, triggering further systematic (CTA) short-covering.
This short-covering caused the second half of C-3m to tighten with Dec20-22 unchanged at 4.50b and Dec22-Jan17 valued at 20.00b (16.50b). Forward sellers meanwhile bid rates beyond 3-months wider as they looked to adjust fresh sales; 2007 gained up to $2.00/mth, 2008 $1.00/mth typically, 2009 less than that, and 2010 up to $2.00/mth.
On Thursday morning trading resumed in Asia at 2770 and prices lifted to a high of 2793 shortly after London rejoined. At time of writing values had eased back towards 2770 and volumes via Select were better at 1,475 lots outright, though not more than average. Having dabbled with support c. 2660/70 only on Tuesday, the market had now broken above Cliff Green Consultancy’s key resistance at 2760. The trading strategists were looking to establish fresh longs, though with indicators like the 14-day RSI at an overbought reading of 69, they awaited corrective pullbacks before re-entering.
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