Copper trading outlook: investors eye upcoming manufacturing PMI data, US housing figures

Copper rose on Thursday and jumped back to positive weekly territory as upbeat data from the US fanned positive sentiment for the recovery of the worlds biggest economy, boosting the industrial metals demand prospects. Investors are looking ahead at next weeks manufacturing data coming out from major consumers, as well as housing and durable goods figures from the US.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in May rose by 0.64% to $3.0450 per pound on Thursday, having shifted in a daily range between $3.0545 and $3.0225 a pound. The red metal rose by 1.27% on Wednesday and managed to offset Tuesdays 2%-drop following Thursdays advance, settling the week little over 0.1% higher. Tuesdays decline was the biggest in a month.

Copper drew support after better-than-expected data from the US implied robust demand prospects as the worlds biggest economy seemed to have overcome a drop in manufacturing activity in the beginning of the year due to inclement weather.

Data by the Labor Department showed that the number of people who filed for initial unemployment benefits in the week ended April 12th rose by only 2 000 to 304 000, beating analysts’ expectations for a jump to 315 000.

The number of Americans who continued to receive jobless benefits fell by 11 000 to 2.74 million in the week ended April 5, marking a 6-year low-point. Four-week moving average for new claims dropped by 4 750 to 312 000, registering the lowest number since October 2007.

A separate report showed that manufacturing activity in the Philadelphia region expanded at the fastest pace since October this month. The Philadelphia Fed Manufacturing Index surged to 16.6 from 9.0 in March, outperforming analysts’ projections for a moderate improvement to 10.0.

A report on Wednesday showed better-than-expected industrial production figures in March. Output in the sector marked a 0.7% increase, beating forecasts of a 0.5% growth, recording a second straight month of expansion. Also, February’s figure was revised from 0.6% to show a 1.2% growth – the highest in 5 months, indicating a strong industrial activity period for the US.

Earlier in the week, better-than-expected retail sales and consumer inflation also helped reassure the US economy had overcome a slowdown in the previous months due to the extraordinary harsh winter this year.

Slowing Chinese economy, the worlds biggest consumer of the metal, pressured the market, but better-than-expected GDP growth in the first quarter helped cap losses.

Market players are looking ahead into next weeks data figures. On Tuesday, existing home sales in the US in March are expected to have fallen to an annualized 4.55 million units, down from 4.60 million a month earlier. Also due on Tuesday is the Richmond Manufacturing Index.

On Wednesday, HSBC and Markit Economics will release their preliminary Chinese HSBC Manufacturing PMI for April and later in the day are due the French, German and Eurozones manufacturing and services Purchasing Managers Indexes. Manufacturing activity in France is expected to have expanded at a bit slower pace, while Germany is expected to post an improvement compared to March. The single currency blocs manufacturing PMI is expected to be flat at 53.0.

Also due on Wednesday are the US manufacturing activity gauge and Marchs New Home Sales, both projected to have marked a gain.

On Thursday, the Ifo Institute for Economic Research will release its German Business Climate Index, which is expected to have registered at 110.5 in April from 110.7 in March. On the other side of the Atlantic, the US Labor Department will likely report a minor rise in initial jobless claims, while the Commerce Department is expected to release data showing a jump in core durable goods orders in March.

On Friday are due retail sales in the U.K. for March, poised to show a decline on monthly basis and a minor advance year-on-year, while in the US the final reading of the University of Michigan Consumer Sentiment Index for April is expected to have marked a rise to 83.0, which, if confirmed, would be the highest level since July.

Technical view

According to Binary Tribune’s daily analysis for Monday, in case Copper May futures manage to breach the first resistance level at $3.0588 per pound, they will probably continue up to test $3.0727. In case the second key resistance is broken, the industrial metal will likely attempt to advance to $3.0908.

If the contract manages to breach the first key support at $3.0268 a pound, it may continue to slide and test $3.0087. With this second key support broken, the movement to the downside will probably continue to $2.9948.