Copper Dulls on Rising Emerging Market Rates
Today’s Spotlight Market?? -? Copper fell to its lowest levels in close to two months due to traders? concerns that emerging market demand for the metal may drop.? Rising borrowing costs in emerging markets could result in lower growth.? Unlike China, which has added liquidity, central banks in Turkey and Brazil have raised interest rates. ?
Fundamentals? – ? In addition to rising rates in emerging economies, the FOMC announced another round of tapering to the tune of $10 billion a month.? Starting in February, the Fed will only purchase $65 billion of long-term assets per month.? Of that total, $35 billion will be long-term Treasury Bonds.? Reading a bit further into the statement, the language the Fed used to describe the current state of the labor market differed.? In December, the FOMC statement emphasized that the labor market had shown further improvement.? On the other hand, yesterday?s statement was a bit more reserved, indicating labor market indicators are mixed.? Otherwise, the statement was very similar to December?s meeting.? China has added liquidity in an effort to stimulate economic growth, which is the slowest the country has seen since 1999.? Manufacturing activity has slowed, and there are signs that the factory sector is shrinking, which could deal a blow to Copper demand. ?
Technical Notes? – View Today’s Chart
Turning to the chart, we see the recent sell-off in the March Copper contract (HGH14) doing some chart damage.? Prices are approaching the 3.2250 support level.? Failure to hold support there could result in prices testing 3.150 or, possibly, even the low 3.00?s.?? The sell-off has resulted in oversold technical conditions, which could be supportive of prices in the near-term.
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