Aluminium futures were trading in a narrow range over the morning period after reaching an intra-morning low of $1,783 per tonne at around 7.31am London time, before a slight uptick in price action saw the metal recently trade at $1,797 per tonne.
The metal’s outright price dipped below the $1,800-per-tonne support level at the start of the week, with aluminium reaching its highest price since May last week at a weekly high of $1,830 per tonne on September 11.
Supporting forward business, aluminium’s forward spreads on the LME continue to trade in a contango - with the cash/three-month spread recently seen at $31.25 per tonne - facilitating near-term business, carry costs and the retention of material.
While risk-sentiment in the commodities sector had waned at the beginning of the week amid a rally in crude oil prices, risk appetite was also lower ahead of the US Federal Reserve’s interest rate decision, whereby a reduction of its lending rate to 1.75-2.00% signaled further progress in the country’s efforts to expand its economy.
“As expected, the Fed lowered the target range for the federal funds rate to 1.75-2% on a 7-3 vote but offered few signals on the next move. It was the second rate cut this year, and the Fed has now given back the rate rises of 2018,” John Browning, founding partner of brokerage BANDS Financial, said in a morning note.
“Fed policymakers' projections for the economy improved with growth rising from 2.1% to 2.2% this year and at 2% through 2020. That positive assessment would cloud the outlook for further rate cuts,” he added.
- Elsewhere in the complex, the three-month nickel price was also higher over the morning, trading at an intra-morning high of $17,345 per tonne and keeping above nearby support levels.
- The dollar index was lower over the morning, falling by 0.25% to 98.31.
- In other commodities, Brent crude oil futures were up by 0.91% over the morning, climbing to $64.12 per barrel.
- In European data this morning, the United Kingdom’s retail sales figures month on month for the August-September period were in line with expectations at a reduction of 0.2%.
- Later, the Bank of England will release its monetary policy summary, official bank rate and asset purchase facility numbers.
- From the United States this afternoon, the Philadelphia Federal Reserve Manufacturing Index, current account and unemployment claims figures are of note.