Copper swung between gains and losses on Thursday, extending this weeks decline following Ben Bernankes testimony to Congress on Wednesday. The Fed Chairman stated the U.S. economy currently needs Fed’s accommodative monetary policy in the foreseeable future and it can even be accelerated, if recovery slows its pace. However, he reinforced Fed’s view that Quantitative Easing is still expected to be tapered within the year and brought to an end by mid-2014, if the requirements are fulfilled.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.124 a pound at 10:40 GMT, down 0.15% on the day. Prices fluctuated between gains and losses, hitting days high at $3.137 and days low of $3.107 a pound respectively. The industrial metal fell more than 1% on Wednesday, extending current weeks decline to over 1% after advancing more than 3.1% during the preceding two.
Copper fell as the dollar extended positions following Bernankes testimony on Wednesday and ahead of his statement before the Senate Banking Committee at 12:00 GMT on Thursday. The dollar index, which measures the greenbacks performance against six major peers, traded at 82.91 at 10:41 GMT, up 0.16% on the day. The U.S. currency gauge regained positions on Wednesday and settled 0.2% higher, cutting this weeks decline to 0.25%.
The Federal Reserve chairman said yesterday in remarks prior to his statement that Fed’s monetary stimulus is not on a “preset course” and reiterated his opinion from last week that the U.S. economy still needs an accommodative monetary policy in the foreseeable future.
“I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Bernanke said. He stated that the central bank still expects to start winding down its monetary easing program by the end of the year and bring it to an end by mid-2014, if the required recovery signs are at hand. However, he left open an option for changing that plan if the economic situation shifts towards negative.
Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul, said for Bloomberg: “Bernanke’s comments were supportive for copper, while there’s concern over China’s economic growth. He also said investors will watch todays U.S. data for direction.
The Labor Department will release Initial Jobless Claims on Thursday. The number of people who have filed for unemployment payments is expected to have dropped by 15 000 to 345 000 after last week an unexpected surge to 360 000 supported Bernanke’s statement that the U.S. labor market is still fragile. The Philadelphia Fed Index is also to be released on Thursday with expectations for a poorer performance, compared to the previous reading.
Meanwhile, on Wednesday the U.S. Census Bureau reported the number of Building Permits issued in June fell to 0.911 million, 7.5% below expectations for an increase of 1.5% to 1.000 million and also below Mays 0.985 million. Housing Starts also disappointed, falling 9.9% to 0.836 million, compared to Mays upward revised reading of 0.928 million and below expectations for a 3.9% increase to 0.959 million.
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