Chinese Manufacturing Data to Set Tone for Copper Prices

Today’s Spotlight Market
While Copper prices have turned choppy, at least in the short-term, many of the other base metals are currently still in a bullish trend. Aluminum prices are near 18-month highs as LME warehouse stock have fallen sharply the past several months and demand has increased, especially for use in the automotive sector. Zinc prices are at their highest levels since 2011 as mine closures and an increase in global demand has buoyed prices. ?


Copper futures prices are facing some headwinds in the guise of a stronger U.S. Dollar of late, which has cast a negative tone to commodities in general. The greenback recently made 8-month highs vs. the Euro as traders expect the U.S. to potentially hike short-term interest rates within the next 6 to 9 months as U.S. economic data has improved. One cannot overestimate the influence of a stronger dollar, which raises the costs of Dollar denominated commodities for non-dollar buyers, on commodity prices especially in today?s global economic climate where economic strength varies greatly by country and region. While Copper prices failed to hold a rally tied to a stronger than expected U.S. housing data earlier this week, we saw prices rebound sharply to the upside on Wednesday as short-covering buying was seen ahead of a report on Chinese manufacturing. ?


Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for Copper futures, we note the recent down-move was halted just above the uptrend line drawn from the major low back in March of this year. While prices rallied sharply on Wednesday, they remain below both the 20 and 200-day moving averages. The 14-day RSI has turned upward from near oversold levels to a more neutral reading of 50.43. The low of 3.0825 made on the recent down-move now looks to be support for Sep Copper, with resistance seen at the ?spike? high of 3.2470 made back on August 11th.?




This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control. Derivatives involve substantial risk and are not appropriate for all investors. Please read the?“Disclosure Statement for Futures and Options”?prior to investing in futures or options. For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and?other risks?apply.