Base Metals Weekly Report: Motilal Oswal

Motilal Oswal's report on Base Metals Weekly

The upside momentum in base metals looks unstoppable, as after a one week break, rally has resumed one again with copper surging to new yearly high. Metals were supported by the weaker US dollar and stronger than expected Chinese industrial production. Data showing high levels of US weekly jobless claims halted a rally in the dollar that was initially triggered by the US Federal Reserve saying it expects economic growth to improve faster than previously forecast.

Outlook

Metals are sensitive to dollar movements, weaker dollar makes those assets cheaper for non-US firms, a relationship used by funds to generate buy and sell signals. The dollar index eased due to U.S. election uncertainty and the latest U.S.-China political tensions, making it cheaper to buy metals using other currencies.

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