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The dollar is headed to the carvery, according to the morning bid in Europe.
Tom Westbrook gives us a look at what the future holds for European and global markets. The dollar's weekly drop was the largest in four months, and traders were looking ahead to 2026 as markets slowed down for Thanksgiving in the U.S. The U.S. is looking to further ease interest rates, while the rest of world seems to be finishing off their rate cuts. South Korea is the latest country to adopt a hawkish stance, abandoning its easing bias. Bonds have fallen. Asahi Noguchi, a former Bank of Japan dove, also adopted a slightly hawkish tone in his speech to Kyushu. He advocated gradual increases and followed the same line as other BOJ policymakers. The Reserve Bank of New Zealand had effectively ended its currency-cutting cycle a day earlier. However, the Kiwi was still up on Thursday. The stock is up by nearly 2% in the last few months since the policy discussion. The minutes of the October meeting at which policymakers held rates steady are due to be released on Thursday. The European markets will be watching the progress of a peace agreement in Ukraine and are expecting confidence data. Russia has denied making any major concessions after the leaked call between Steve Witkoff, a U.S. envoy and a senior Kremlin official. The markets still have 90 basis points worth of U.S. interest rate cuts priced between now and 2026, compared to 75 bps for Japan and 40 bps for New Zealand. The U.S. Dollar Index is down about 1 percent from the six-month high reached last week. Although rates in New Zealand and Japan are lower than in the U.S.A., currency markets are always looking ahead and can influence exchange rates, as investors search for the highest yield. The Aussie has been discussed as a possible breakout by traders. Australian rates for 3-years and 10-years are now the highest in G10 after a higher-than-expected inflation figure on Wednesday. The Aussie has been trudge along in the same channel for over 18 months. The currency could be freed by a slight increase in the yuan. The U.S. stock and bond market is closed on Friday and only trades for half a day. The following are key developments that may influence the markets on Thursday. Thanksgiving Day in the United States -Euro zone consumer confidence, ECB minutes
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Gold prices fall from near two-week peak as investors take profits
On Thursday, gold fell on profit-taking following a two-week-high in the previous session. Investors also weighed the likelihood of a U.S. rate cut for December amid contradictory signals from the Federal Reserve. As of 0405 GMT, spot gold was down 0.5% at $4,145.08 an ounce. U.S. Gold Futures for December Delivery fell 0.6% to $4140.80 an ounce. After Wednesday's rise )... Gold is consolidating because the Fed hasn't decided what it's going to do. Investors seeking to protect themselves from increased policy uncertainty have sought protection through swaptions and derivatives linked to overnight rates. Some Fed officials led by New York Fed president John Williams and Governor Christopher Waller have said that a December easing could be warranted because the weak labor market is putting downward pressures on Treasury yields. In the previous session, benchmark 10-year Treasury yields were near their lowest levels in over a month. However, their stance contrasted with that of several regional Fed Presidents who advocated a pause on easing until the inflation showed a more compelling move towards the 2% target. Kevin Hassett has also said that rates should be lowered, as has Donald Trump. According to CME's FedWatch, U.S. rate forwards price in 85% of a December rate cut. Gold that does not yield tends to do well in an environment of low interest rates. Data on Wednesday revealed that weekly jobless claims declined last week despite the fact that the labor market struggles to create enough jobs for those who are unemployed. In November, U.S. consumer sentiment also declined due to concerns about jobs and household finances. Other than that, silver spot fell by 0.9%, to $52.89 an ounce. Platinum gained 1.4%, to $1.611.04 and palladium dropped 0.9%, to $1.409.87. (Reporting and editing by Rashmi aich, Eileen Soreng, and Ishaan arora in Bengaluru)
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Shanghai copper gains on increasing bets of December Fed rate reduction
Shanghai copper continued its gains for the fourth consecutive session on Thursday as renewed hopes of a December rate cut by U.S. Federal Reserve boosted sentiment. As of 0330 GMT the most traded copper contract at the Shanghai Futures Exchange had risen 0.27% to 86,920 Yuan ($12,277.70), after reaching 87,300 Yuan earlier in the session, which was the highest since November 14 The benchmark copper for three months fell 0.44%, to $10 927 per ton. The London copper price eased after it broke through $11,000 per ton on the previous Wednesday. It reached $11,025, its highest level since October 30. ING analysts wrote in a recent note that the market now prices in a probability greater than 80% for a Fed cut in December, up from 30% a few weeks ago. As U.S. retail sales and consumer confidence weakened, a rate cut was expected this year. Codelco is the top copper producer in the world and they are pushing for a premium of up to $350 per ton. This is a steep increase from the $89 last year. Some Chinese buyers may not sign a contract for this year. Nicholas Snowdon, the high-profile copper bull who is also the head of Mercuria's metals research, stated that he expected copper prices to reach new heights in 2025. He cited the shortage of copper concentrates when delivering a keynote address at the World Copper Conference 2020 on Wednesday. Other base metals in the SHFE rose 0.33%. Zinc jumped 0.27%. Tin soared 1.84%. Lead fell 0.79%. Nickel dropped 0.61%. Aluminium, zinc, lead, and nickel all fell in price on the LME. Tin was the only metal to gain, with a gain of 0.68%. Final Nov. 27th DATA/EVENTS 1000 EU Consumer Confid. Final Novembre
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Iron ore prices remain unchanged amid weaker demand and a weaker dollar
Iron ore futures were unable to find direction on Thursday, as falling China lump-ore premiums indicated weak demand for steelmaking materials and offset support from a soft dollar. By 0317 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange climbed 0.13% to 797 Yuan ($112.57) per metric ton. The benchmark December Iron Ore at the Singapore Exchange fell 0.04% to $106.5 per ton. According to Chinese consultancy Mysteel, China's seaborne Iron Ore Lump Premiums against 62% Fe Fines have fallen 42.2% since two months ago and reached their lowest level in late May 2024. Mysteel stated that the low premiums are due to a decline in demand from steelmakers who have been suffering losses. India's finished imports of steel during the first seven-months of the current financial year fell 34.1% on an annual basis, and China's output is expected to fall below 1 billion tonnes this year for first time in 6 years following a pledge by the government to reduce production. Galaxy Futures, a Chinese broker, says that the decline in iron ore and coking coal prices has accelerated due to increased coal supplies and inventory accumulations at coal mines. Galaxy stated that the pig iron production will continue to fall this week. This will put pressure on raw materials. The U.S. Dollar Index was flat at 99.543, having fallen from its six-month high reached a week earlier to reach its biggest weekly drop since July. Dollar-denominated investments are more affordable for holders of currencies other than the greenback. Coke and coking coal were both up or down on the DCE. The benchmarks for steel on the Shanghai Futures Exchange are mostly down. The price of rebar fell 0.36%. Hot-rolled coils dropped 0.15%. Stainless steel declined 0.36%. Wire rod rose 0.48%. ($1 = 7.0800 Chinese yuan) (Reporting by Lucas Liew; Editing by Subhranshu Sahu)
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Noguchi, the Bank of Japan's Noguchi, advocates gradual rate increases
Asahi Noguchi, a member of the Bank of Japan's board, said that it can increase interest rates as soon as tariff risks subside, but only at a "measured and step-by-step pace". He stressed the importance of treading carefully when increasing borrowing costs. Noguchi warned against keeping interest rates low too long, as it could have negative effects on the economy. For example, the yen would weaken and inflation would rise unwelcomely. These remarks come after those made by Governor Kazuo ueda, and other members of the nine-member BOJ board who indicated that there was a possibility of an increase to the BOJ policy rate next month. The warnings come at a time when the recent decline of the yen to its 10-month-low against the dollar has triggered currency intervention warnings, a sign that the administration is concerned about the impact of the weak currency on import costs and inflation. Noguchi stated in a recent speech that while the sole goal of monetary policies is to achieve stable prices, changes in exchange rates and asset prices are important transmission channels. He said that if the yen falls, it will exert upward pressure on prices and economic activity through imports and exports. Noguchi stated that although a weaker yen boosted exports in Japan during the deflationary period, these benefits start to diminish as the economy nears full employment, and the output gap closes. He added that "as supply constraints increase, positive effects will eventually fade and be replaced by negative ones which push inflation above the needed level." NONE OF THE FASTNESS OR SLOWNESS IS TOO HIGH The BOJ put its policy on hold to examine the impact of U.S. Tariffs. Noguchi stated that as the impact of higher U.S. tariffs subsides the BOJ could gradually increase rates again, if the economy is moving in line with the BOJ's projections and prices are rising. He said that for inflation to move sustainably around its 2% goal, the BOJ needs to ensure real wages stabilize around 1%. This condition is likely to be achieved sometime between the second half of fiscal year 2026 and fiscal year 2027. Noguchi stated that the BOJ, with this time frame in mind, should move rates to neutral levels at a rate which is neither too rapid nor slow. The pace of rate increases could be too rapid, which would hurt the wage-hike momentum of companies and make it harder to achieve the central bank's inflation target of 2%. He added that rate increases too slowly could destabilise the economy and prices. He said that the BOJ should carefully examine the various economic channels and how they ultimately impact economic activity and prices. The policy rate can be used to adjust the level of monetary flexibility as needed. Next, the BOJ will hold a policy-making meeting from December 18-19. A second one is scheduled for January of next year. A survey showed that a small majority of economists believe the BOJ will raise rates in March. All of them predict a rate hike of 0.75% in March 2019. Japan's consumer price inflation has been above the BOJ's target of 2% for more than three years. The increase in wages is primarily due to the stubbornly high prices of food, but a growing labour shortage also has a role. (Reporting and editing by Christian Schmollinger; Leika Kihara)
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China releases first batch of crude oil import quotas 2026 for independent refiners
Multiple trade sources reported on Thursday that independent refiners have received the first batch of crude import quotas from China for 2026. These quotas can be used to purchase cargoes due to arrive by the end the year. The new quota will boost crude oil imports to the world's biggest oil importer. Supply glut Two sources familiar with the matter confirmed that Hengli Petrochemical was the refiner who received the quota for the import of 2 million metric tonnes (40,000 barrels of crude per day). Three sources familiar with the matter confirmed that Rongsheng Petrochemical had been granted a quota of 750,000 tons. Shenghong Petrochemical, Hongrun Petrochemical, and Hongrun Petrochemical were each given 120,000 and 530,000 tonnes, respectively. Sources at a second independent refiner confirmed that the company expects to receive official notification on Thursday. Three trade sources reported that 21 refiners have received nearly 8 million tonnes of quota, compared to 6.04 million in November 2024. The Ministry of Commerce of China, which controls crude oil import quotas in China, did not respond immediately to a request for comment sent by fax. The ministry set the crude oil price last month. import quota For 2026, the non-state trade is unchanged at 257 millions tons. One source said that Beijing will dispatch the remaining quotas for 2026 as early as next year.
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Stocks surge on hopes of Fed easing, but yen is locked in the intervention zone
The dollar fell on Thursday as traders began to weigh the possibility of a rate increase before the end of the year. Asian stocks also rose. The holiday-shortened week has resulted in limited movements across the markets. Stocks have maintained a generally positive tone, while currencies are more calm as investors shed AI bubble fears that had shaken equities early in November. The U.S. market is closed on Thanksgiving Day, Thursday. It will reopen for a brief session on Friday. MSCI's broadest Asia-Pacific share index outside Japan rose 0.4%, following Wall Street gains and on track to end a three-week loss streak. Japan's Nikkei, and South Korea's Kospi both surged by over 1%. Charu Chanana is the chief investment strategist for Saxo. He said that stocks have responded positively to renewed Fed rate-cut expectations, which helped to cool recent AI bubble concerns. The Fed's anticipated cut and strong seasonality make December a difficult to bearish month, and Santa rally is still on the table. China's property sector has been in the spotlight again after China Vanke, a property developer, sought approval from bondholders to delay repayment of an onshore bond worth 2 billion yuan (282.6 million dollars). At the opening of the market on Thursday, bonds issued by Vanke continued to fall. This is a continuation of this week's losses. Vanke's bonds in yuan have fallen by more than 20%. Some are down as much as 40%. China's CSI300 property index dropped to a new low of 1.5%. The broader CSI300 Index however ticked up by 0.4%. WAGE WAGERS FOR SURGING RATE CUTTING The U.S. data has returned since the 43-day record government shutdown ended in mid-November. However, the majority of economic reports released so far are significantly outdated and offer very little insight on the state of the economy. Investors are now focusing on the comments of Fed officials in order to determine U.S. monetary policies. Comments this week by San Francisco Federal Reserve Bank president Mary Daly, and Fed Governor Christopher Waller have boosted expectations for a rate reduction. CME FedWatch shows that traders now price in 85% of a rate reduction next month, compared to just 30% one week ago. George Boubouras of K2 Asset Management said that the weakening labour market is sufficient to offset inflation. A rate cut in December looks reasonable. While core inflation is higher than target, the U.S. breakeven 10-year inflation rate of around 2.25 percent suggests that markets remain comfortable with inflation expectations. The euro reached its highest level in over a week, at $1.16115. The dollar index (which measures the U.S. currencies against six rivals) was 99.431, down 0.28% from the previous day. According to data released on Wednesday, the number of Americans who applied for unemployment benefits last week fell to its lowest level in seven months. This suggests that layoffs are still low. The sterling rose to $1.3247 in a month's time, after the UK Finance Minister Rachel Reeves budget eased some concerns about Britain's finances on a long-term basis. Watches YEN The Japanese yen gained a little to 156.07 dollars as investors waited for Tokyo to intervene after weeks of verbal scolding by authorities to stop the currency's steady decline. Sanae Takaichi, Prime Minister of Japan, ruled out Wednesday that Japan might face a "Truss Moment" or loss in market confidence resulting from her fiscal expansion. Since the beginning of October, the Japanese currency has fallen by almost 10 yen. This is because Takaichi assumed the presidency amid concerns that the government's spending plan will require heavy borrowing and doubts about the timing of the Bank of Japan's next rate increase. Sources have told us that the BOJ has been preparing the markets for an upcoming rate hike. It may even be as early as next month. The BOJ could also adopt a more consistent path of rate hikes to change the trajectory of its currency. Bitcoin gained 1.75% on Thursday to $91,787.55, on course to end a four-week loss streak with a gain of nearly 3%. Gold fell 0.4% to $4146.53 an ounce after rising by 0.8% the previous session. (Reporting and editing by Shri Navaratnam in Singapore, Ankur Banerjee)
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Investors weigh Fed rate-cut betting as gold steadies near two-week-high
The gold price was largely unchanged on Thursday, after reaching a two-week high the previous session. Market participants were weighing the possibility of an interest rate cut in December by the U.S. Federal Reserve amid contradictory signals. As of 0200 GMT, spot gold was down by 0.2%, at $4,154.09 an ounce. U.S. Gold Futures for December Delivery fell 0.3% per ounce to $4,151.20. GoldSilver Central MD Brian Lan stated that the Fed was not clear about what it would do next. Gold is consolidating ahead of the Fed meeting, which begins this week. Investors seeking to protect themselves from increased policy uncertainty have increased the flow of swaptions and derivatives linked to overnight rates. Some Fed officials have said that a December easing could be warranted because the weak labor market is putting downward pressures on Treasury yields. In the previous session, benchmark 10-year Treasury yields were near their lowest levels in over a month. However, their stance contrasted with that of several regional Fed presidents who advocated a pause on easing until the inflation showed a more compelling move towards the 2% target. Kevin Hassett has also said that rates should be lowered, as has Donald Trump. According to CME's FedWatch, U.S. rate forwards price in an 85% probability of a rate reduction in December. Gold that does not yield tends to do well in an environment of low interest rates. Data on Wednesday revealed that the number of weekly jobless claims dropped last week, despite the fact that there are still not enough jobs to go around. In November, U.S. consumer sentiment also declined due to concerns about the economy and household finances. Other than that, silver spot fell by 0.9%, to $52.89 an ounce. Platinum gained 1.4%, to $1.611.04, while palladium dropped 0.9%, to $1.409.87. (Reporting by Ishaan Arora in Bengaluru; Editing by Rashmi Aich)
The Lithium Rally promises a breather to struggling Australian miners
Sources and analysts say that the recent rise in lithium prices may ease pressure on producers in Australia who are struggling to reduce their exposure to battery materials, causing them to abandon plans to sell certain projects.
The shares of Australia's lithium mining companies have increased by up to a third in the past month. They also extended their gains this week, after news that China had cut back on its supply sparked hope for a turnaround.
This follows years of falling prices due to slower sales than expected. Lithium companies were forced to close down operations, and in recent times to sell assets to rebuild balance sheets.
Sources, who spoke on the condition of anonymity said that Australia's Mineral Resources and Chile's SQM had tried to sell stakes this year. IGO is looking to restructure its joint venture for lithium refining with China's Tianqi Lithium.
Analysts say that despite the fact that speculators have fueled this rally, it will calm down producers who are burning through their cash.
This could remove assets from the market once they are listed, denying buyers the opportunity to buy them at a low point in the business cycle when the West is racing against China to create a battery supply network outside of China.
Analyst Dan Morgan from Barrenjoey, Sydney, said: "The common thread is the diabolical price and market conditions."
All Australian producers would breathe a huge sigh... They may have to put some of the less-than-pleasant and permanent options that they were considering back into the bottom drawer.
The lithium-bearing hard rock spodumene mineral has rebounded from its four-year lows of $610 per tonne, reached in mid-June. However, it is still far below the peak of $6000 that will be achieved by 2022.
E&P Financial, in a report, said that it was difficult to determine whether the supply cuts were temporary or permanent.
The giant Chinese electric vehicle battery manufacturer Contemporary Amperex Technology said Monday that it had suspended its mining operations in Yichun, a southern region, after a licence to mine expired on August 9.
Analysts said that the surge in share price was likely fuelled by rallies to cover shorts. Shortman, a data provider, reports that Australian lithium miner companies are among the five most-shorted ASX stocks.
Selling Potential
Two sources, who spoke on condition of anonymity, said that MinRes, a debt-ridden company, tried to sell its Mt Marion lithium assets and Wodgina Lithium assets in Western Australia but failed because buyers balked at a price of over $2 billion.
A company spokesperson said that "MinRes does not comment on speculation in the market as a matter of policy." He added, "MinRes is always looking for opportunities to maximize returns to shareholders."
Reports in March indicated that four Indian state-owned firms were in negotiations with SQM to acquire a 20% stake in two of its lithium projects in Australia, for $600,000,000, as New Delhi sought to secure supplies for the metal used in EV batteries.
SQM has not yet responded to the request for comment.
Analysts expect that IGO will sell its shares. IGO said in the last month it would be reviewing all options for the lithium refinery, which is losing money.
IGO has declined to comment.
As Australia has been the hardest hit by the global production cutbacks, the supply can return to normal, lowering prices.
Due to the persistent weakness of spodumene, Pilbara Minerals put its Ngungaju facility in Western Australia on care and maintenance late last year.
Dale Henderson, Pilbara's CEO, told journalists on August 1 that if the conditions improve, it could take as little as 4 months to ramp up production. (Reporting and editing by Clarence Fernandez; Melanie Burton)
(source: Reuters)