Copper extends losses on U.S. and China economic outlook

Copper made a steep fall on Wednesday, going back towards the three-year low it hit on Tuesday, pressured by speculation Fed will taper its bond purchasing program in the near future.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.040 a pound at 10:31 GMT, down 1.018% on the day. Prices ranged between days high and low at $3.094 and $3.020 respectively.

Copper fell 3.14% last week as the stronger dollar weighed on all dollar-priced commodities following Ben Bernankes statement on the monetary stimuluss future. The metal fell to a three-year low of $2.985 yesterday amid dim demand outlook in the biggest consumer – China. Concern about the economys growth arose following the cash squeeze that has settled in. However, prices rebounded as Ling Tao, deputy director of the Shanghai branch of the People’s Bank of China, said the central bank’s will guide interest rates to a “reasonable range”, which eased concern on the metal’s appeal. Tao also said interbank liquidity is overall under control and ample. He added that the People’s Bank of China will keep monitoring the the economy and will keep making efforts into stabilization.

However, prices were pushed back down on Wednesday as latest U.S. economic data surpassed expectations and pointed at stable recovery in track with Feds projections. The U.S. Commerce Department said yesterday that Durable Goods Orders stood at 3.6% for May, 0.6% higher than the 3% forecast, equaling April’s 3.6% revised reading. Core durable goods (Durable Goods Orders ex Transportation), which exclude the more volatile transportation items, outperformed expectations of a decrease to 0%, standing at 0.7%. Last month’s revised reading stood at 1.7%. Core Durable Goods ex Defense also exceeded anticipations, surging to 3.5%, compared to the 2.7% forecast and April’s 2.5% revised reading. Meanwhile, the S&P/Case-Shiller Composite-20 Home Price Index showed home prices jumped to 12.05%, surpassing 10.06% expectations and April’s 10.85% revised figure. Meanwhile, the U.S. Census Bureau reported New Home Sales exceeded forecasts of a decrease to 0.460 million from last month’s 0.466 reading. May’s indicator unexpectedly rose to 0.476 million, supporting previous data for economic recovery. The Conference Board said that Consumer Confidence in the U.S. reached a five-year high, going well above expectations. CCI stood at 81.4 for June, compared to 76.2 for the preceding month and surpassing projections of 75.

This supported the central banks intentions to curb its monetary stimulus during the second half of the year and end it by mid-2014, if recovery goes as projected. The dollar, which trades inversely to copper, extended gain on Wednesday. The dollar index, which measures the greenbacks performance, gained 0.32% and stood at 83.05 at 10:24 GMT. The U.S. currency gauge marked a 2.21% weekly gain last week, following a 1.06% decline during the preceding one.

Investors are now looking into the upcoming U.S. economic data, scheduled for Wednesday and Thursday. The final Q1 GDP reading is due at 10:30 GMT. It is expected to show no change compared to the same quarter last year, standing at 2.4%. Consumer Spending (Personal Consumption Expenditures) for Q1 will likely stand unchanged at 3.4%, compared to Q1 2012. Core Consumer Spending for Q1 should be at 1.3%, the same like last year. On Thursday, Personal Income, Personal Spending, Core Consumer Spending for May, Pending Home Sales and Initial Jobless Claims are expected to provide information whether the U.S. economy is reaching its recovery goals and remain on track with Fed’s expectations.