FX.co ★ Zinc Futures Hit Near 6-Month High

In mid-September, zinc futures surpassed $2,960 per tonne, marking a near six-month peak, driven by a weakening US dollar and constrained supply conditions in China. The US dollar's decline followed the Federal Reserve's indication of a potential interest rate cut in the upcoming meeting, with the market largely anticipating a 25 basis point reduction and a slight possibility of a 50-point decrease. This more accommodating monetary stance has buoyed global liquidity expectations and led to a softer dollar, thereby increasing demand for commodities priced in US dollars. Concurrently, China's anticipated reduction in output, prompted by Beijing's reinforced attempts to address overcapacity in significant industrial sectors, seeks to mitigate ongoing deflationary challenges. Furthermore, recent economic indicators from China have underscored continuing economic fragility, with industrial production in August dropping to its lowest in a year and failing to meet market projections, while retail sales hit an eight-month low, also falling below expectations.