LONDON (Commodity Online): A weaker dollar has given the base metals a boost heading into the afternoon. Aluminium, Lead and Zinc have continued to outperform the likes of Copper and Tin with yesterday’s strength spilling over into this morning.

With LME week in full swing, volumes remain . As such, technical signals, the dollar and equity markets will continue to dictate price direction.

An added dynamic over the next week or so is the Q3 reporting season, with the likes of JP Morgan reporting tomorrow and Goldman Sachs and Citigroup on Thursday. The impact of these results on the US equity markets may have a spill-over effect on the base metals markets, particularly during US trading hours.

Copper as been relatively subdued so far this week, more or less trading sideways. The metal has rallied back above $6,300 heading into the afternoon, however an increase in on-warrant stocks - up 1,125 mt this morning - has weighed on prices. Ultimately, the metal still remains range-bound.

Zinc by way of contrast has traded above $2,100, reaching the highest level since July 2008. Much of the legwork was done yesterday, with the metal rallying 3%, however that momentum, aided by a weaker dollar, have seen prices continue to rise.

Also providing support has been a 1,925 mt fall in on-warrant stocks, due primarily to a 1,225 mt jump in cancelled warrants in New Orleans. With the main data releases starting tomorrow and Thursday, caution could be the main theme. Data-wise it will be a quiet day in the US.

Courtesy: Commodities Research, The Standard Bank

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