The dollar index, which measures the value of the US dollar against a basket of foreign currencies, fell by 0.08% to 95.93 as at 10.27am Shanghai time. This compares with a reading of 96.16 at a similar time on Monday. The index is now below the key psychological level of 96.
This latest bout of weakness in the US currency follows criticism overnight from US president Donald Trump, in which he blames the Federal Reserve for depressing the US economy.
Trump said the economy and stock market would have been even stronger had the Federal Reserve kept interest rates low rather than raising rates four times in 2018.
Federal Reserve officials decided last week to keep the benchmark interest rate unchanged but opened the door to possible adjustments later in the year if conditions weaken.
Market participants believe a rate cut at next month’s Federal Open Market Committee meeting is highly likely, with 38.5% odds on a 0.5% move and 61.5% odds on a 0.25% move, according to the CME FedWatch tracker.
“The [dollar] has lacked traction since the Fed dropped heavy hints that it's ready to start a monetary policy easing cycle as soon as July,” Alfonso Esparza, senior market analyst from Oanda noted.
Investors’ appetite for risk has improved in line with the dollar’s decline, which has provided broad support to the SHFE base metals this morning.
SHFE zinc prices outperformed as they mimicked the strength shown by the London Metal Exchange’s three-month zinc price on Monday.
The LME’s three-month zinc price was up by 2.3% at just under $2,500 per tonne at the close of trading on Monday
. The price increase comes amid an apparent lack of readily available material. On-warrant material at LME warehouses is down to 65,000 tonnes from some 90,000 tonnes at the start of June, a drop of more than 27%.
The most-traded August zinc price on the SHFE stood at 19,820 yuan ($2,881) per tonne as at 10.26am Shanghai time, up by 235 yuan per tonne or 1.2% from Monday’s close of 19,585 yuan per tonne.
In copper, prices continue to benefit from ongoing supply disruptions amid strike action at Codelco’s Chuquicamata copper mine in Chile after the company’s latest wage offer was rejected in an informal union vote
The most-traded August copper contract stood at 47,000 yuan per tonne as at 10.26am Shanghai time, up by 250 yuan per tonne, or 0.5%, from Monday’s close of 46,750 yuan per tonne.
- The US dollar index was down by 0.08% at 95.93 as at 10.27 am Shanghai time.
- The Shanghai Composite Index slid by 1.35% to 2,967.72 as at 10.54 am Shanghai time.
- In US data on Tuesday, the Conference Board’s reading of consumer confidence, the Federal Reserve Bank of Richmond’s manufacturing index and new home sales are of note.
- In addition, there are Organization of Petroleum Exporting Countries (OPEC) meetings scheduled throughout the day.