New York copper added modest gains before noon in Europe today. Strong figures on factory activity in the US and EU off-set somewhat disappointing data from China yesterday. US unemployment rate eyed.
Copper futures for July, the most traded contract on the COMEX in New York, traded for $3.0365 per pound at 11:58 GMT, adding %. Prices ranged from $3.0135 to $3.0415 per pound. Previously, the contract lost 2.33% over the last three trading days on poor quarterly figures in the US and weak manufacturing growth in China.
Later today the official report on unemployment in the US for April is expected to reveal 210 000 new nonfarm payrolls, surpassing last months 192 000 increase. Meanwhile the unemployment rate is projected to stand at 6.6%, down from Marchs 6.7%.
Previously, the Fed testified its confidence in the US economy, by reducing monetary stimulus by another $10 billion, shrugging off a dismal 0.1% annual growth for the first three months of 2014.
Meanwhile, ISMs manufacturing PMI standing for April was recorded at 54.7, well-ahead of expectations and above the 53.7 from last month. The gauge is reflecting a steadily improving industrial, and overall economic activity in the US, after a harsh winter withered down growth.
A strengthening US economy supports the dollar, lifting the price of copper for foreign currencies. At the same time better industrial output would result in higher demand for the metal. Events, such as the Fed Chair’s speech and FOMC announcements have an immediate influence on the greenback, while only indicating long-term movements in the economy.
China
Government data on manufacturing output for April revealed a worse-than-expected PMI at 50.4. The figure does, however, improve on last months 50.3 reading, and is still above the “50” mark, which translates into growth. Next week HSBCs final standing for manufacturing PMI for China will be released. The preliminary report put the figure at 48.3, signaling contraction.
“This China PMI data is kind of disappointing,” said for Bloomberg Helen Lau, commodity analyst at UOB Kay Hian Ltd. “To make the copper price rebound, we really need better-than-expected numbers.”
However, with peaking construction activities and a reported 500 000 tons of copper targeted stockpile by the government, demand outlooks for the red metal in China seem positive.
“Purchases by China’s State Reserve Bureau (SRB) have improved the outlook for prices. The reason why we are expecting prices to lift is the planned stockpiling by the SRB – 500,000 tonnes is a very material amount in terms of purchases,” said for Reuters analyst Matt Fusarelli of AME Group in Sydney.
Earlier today the final reports on Aprils factory PMI in the Eurozone offered sizable support for copper. Germany recorded a slight slow-down in the pace of industrial activities to stand at 54.1, while Italy and France registered gains on the advance readings, to settle at 54.0 and 51.2, respectively. The Bloc as a whole also added to preliminary data, to log at 53.4.
Technical view
According to Binary Tribune’s daily analysis, in case Copper July futures manage to breach the first resistance level at $3.0360 per pound, they will probably continue up to test $3.0505. In case the second key resistance is broken, the contract will likely attempt to advance to $3.0670.
Should the red metal breach the first key support at $3.0050, it may continue to slide and test $2.9885. With this second key support broken, the movement to the downside will probably continue to $2.9740.
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