Copper trading outlook: prices steady after US data, China factory PMI eyed

Copper prices steadied slightly above the previous close during midday trade in Europe today, after the US posted encouraging housing data. Investors now eye HSBCs China manufacturing PMI this Thursday, with expectations of further support.

Copper futures for September delivery traded at $3.1125 per pound at 12:43 GMT on the Comex in New York, up 0.11%. Prices ranged from $3.1055 to $3.1220 per pound. The contract added 0.19% on Monday, after losing about 1.5% last week.

The US economy posted key figures today. Housing starts grew by 15.7% on a monthly basis in July, while building permits added 8.1%, supporting copper prices. The red metal is widely used in construction, and housing data is a major driver for prices.

On a broader scale, the US economy showed more signs of recovering growth, as July CPI was logged at 2.0%, as expected and matching the Feds current inflation target.

Elsewhere, HSBC and Markit will post their preliminary reading on Chinese manufacturing for August this Thursday. The report is highly anticipated by traders, as China is the leading market for industrial metals, with a 40% share of global copper demand.

“The metal is heavily dependent on the data from the U.S. and China, which are both heavy users of metals,” Naeem Aslam, chief market analyst at Ava Trade, said for Reuters. “Moreover, we also have the FOMC meeting minutes due tomorrow and as long as the Fed stays accommodative, we could see another push towards the upside for the metal.”

Analysts expect a 51.5 manufacturing PMI be logged by HSBC, which would mean the third month of expansion in the sector, spelling brighter outlooks for copper bulls.

Previously, Chinese data pressured the red metal on Monday, as house prices were reported to have fallen for the third straight month. Last week China reported a drop in copper imports, alongside further below-par economic data, pressuring the red metal to lose some 1.5%.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, September coppers central pivot point on the COMEX stands at $3.1098. In case the future manages to breach the first resistance level at $3.1257, the contract will probably continue up to test $3.1423. In case the second key resistance is broken, the red metal will likely attempt to advance to $3.1582.

If the contract manages to breach the first key support at $3.0932, it will probably continue to slide and test $3.0773. With this second key support broken, the movement to the downside may extend to $3.0607.