Copper little changed near five-week low on QE outlook, Euro zone industrial production

Copper was little changed in European trading after falling to a five-week low during the Asian session amid broad expectations that the Federal Reserve will pare its monetary stimulus after FOMCs upcoming meeting next week. Downbeat industrial production in the Euro zone on Thursday also weighed on the market.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December slipped 0.02% to $3.208 per pound at 8:09 GMT. Prices fell to a days low of $3.199 in the Asian session, the weakest level since August 7, while days high stood at $3.223. The industrial metal plunged little over 2% on Thursday, extending its current weeks decline to 1.6% after surging 0.7% in the preceding five-day period.

Copper continued to fall on Friday amid expectations that Fridays likely upbeat U.S. data will reinforce speculations that the Fed will begin decelerating its Quantitative Easing program after next weeks FOMC meeting. Data today may show that August’s retail sales have increased by 0.5% in August following a 0.2% jump in July. Core retail sales likely rose by 0.3%. Producer inflation (Producer Price Index) should have risen by 0.2% on a monthly basis and 1.3% from a year earlier. Core PPI is expected to have gained 0.1% from July and 1.3% from August 2012. The preliminary reading of the Reuters/University of Michigan Confidence index is projected to have declined by 0.1 to 82.0.

According to a Bloomberg survey conducted last Friday, the central bank will trim its monetary stimulus by $10 billion after the meeting. Goldman Sachs analysts shared the same prediction.

On Thursday, Eurostat, the statistical office of the European Union, reported that the euro regions industrial production has fallen by 1.5% in July, underperforming expectations for a 0.3% contraction. Junes advance was revised downward by 0.1% to 0.6%. Year-on-year, Julys factory output declined by 2.1%, mismatching economists projections for a minor 0.2% drop. The preceding months 0.3% advance was revised down to a 0.4% contraction.

Xu Liping, an analyst at HNA Topwin Futures Co. in Shanghai, said for Bloomberg: “Investors are awaiting the outcome of the Fed meeting next week, betting a tapering is very likely. The data from Europe reduces buying interests.”