LME nickel snaps six session losing streak on US jobs data

Monday, October 06, 2014

LME nickel futures rebounded on Friday as the three month contract snapped a six session losing streak, adding 2.5% throughout the day. Gains were sparked by stronger US jobs data as the US added 248K positions in September, significantly more than the 215K expected by market participants according to a Bloomberg poll. Activity overnight and early this morning has seen nickel find support just above Friday’s close as prices hold just below $16,600/tonne.

Gold prices extended losses overnight as spot prices hit their lowest level this year, trading towards $1,183/oz during the Asian session as investors continued to lose interest in the yellow metal. After shedding 1.9% on Friday and ending the week 2.2% lower on stronger than expected non-farm payrolls prices faced firm selling pressure around Friday’s close with gold facing further downward pressure from the continued strength in the USD. The dollar index saw a brief correction overnight as it pared back to 86.540 after rallying 1.3% on Friday against a basket of major currencies.

Asian stocks rebounded overnight, recovering some of the previous week’s losses as protestors in Hong Kong began talks with the government. The start of the relief rally saw both the Nikkei and TOPIX add just over 1.0% throughout the session on a combination of diminishing political tensions and a stronger than expected US labour market. 

Front month Brent crude futures saw losses extend to levels last seen in 2012 on Friday as oversupply weighed heavily on market prices. Prices closed 1.5% lower on Friday capping a week of heavy selling pressure which saw the global benchmark price lose 4.65% over four straight sessions of selling. Brent futures slid as low as $91.48/bbl last week as investors sold nearby Brent contracts on speculation that OPEC members wouldn’t scale back production in a bid to address the supply overhang. Adding to the downward price pressure on Brent prices has been the extended period of sluggish demand, with recent manufacturing PMI data for the eurozone and China indicating a further slowdown in activity.

Front month WTI futures slid below $90/bbl for the first time since April 2013 after Saudi Arabia cut export prices to Asia to their lowest in almost six years, forcing the US benchmark lower. The recent declines in both crude benchmarks have seen the Brent/WTI spread narrow to levels last seen in August last year, trading below $1.50 at one point on Friday with activity early this morning seeing WTI trade at a $2.20 discount to Brent.

LME nickel prices rebound on Friday

LMNIDS03 Comdty LME NICKEL 3 2014 10 06 07 48 52

Spot gold prices reach lowest level so far this year

XAU Curncy Gold Spot Oz D 2014 10 06 07 23 38

DXY holds firm around 86.540

DXY Curncy DOLLAR INDEX SPOT 2014 10 06 07 29 36

Brent futures slide lower on ample supply

CO1 Comdty Generic 1St CO Fut 2014 10 06 07 31 58

Events for today

CN Market Holiday 

0700

DE

Aug

Industrial Orders

0930

EZ

Oct

Sentiment Index

1500

US

Sep

Employment Trends

Topics: Crude oil, Brent, WTI, DXY, LME, Nickel
More from: Kash Kamal