Thursday, August 1, 2013

Copper Rises Amid Supportive Cues From US And China

MCX Copper
futures continued to edge higher today, as global cues remained supportive. Asian stocks edged up on a decent uptick in US GDP yesterday and lack of any further taper talk from the US Federal Reserve also supported sentiments. Copper has been strained on worries posed by Chinese demand slowdown in last few days but witnessed a good recovery this week with three week lows around $3.04 auguring as good support levels. COMEX copper is up 0.37% at $3.130 per pound right now.

The US Federal Reserve stated yesterday that the information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. The US economy grew at an annualised rate of 1.7% in the second quarter of 2013, largely in line with the expectations after the recent surge in housing and consumer confidence data.

Meanwhile, today, China's manufacturing PMI improved slightly from 50.1 in June to 50.3 in July, but was still close to the neutral level of 50. The July reading indicates that the growth momentum of China's manufacturing sector has stayed weak, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing. Ten of the twelve sub- indices were higher than their respective levels in the previous month. The rise in the headline PMI in July was largely due to the accelerating growth of output.

The US dollar has come off its six week low against the Euro and could gain further ahead of the monetary policy meetings of the ECB and the BOE. However, copper is placed rather well given the US GDP figures and Chinese manufacturing data. Unless the US dollar launches a massive rally, the metal should hold on. MCX Copper futures broke above Rs 420 per kg levels yesterday and currently trade at Rs 421.90, up Rs 0.35 per kg on the day.

Source by Commodity Insights

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