Copper prices managed to carve out a gain on Monday. For a change, it was news out of the United States, and not China, that caused the red metal to bounce back ever so slightly.
The Dallas Federal Reserve said business activity among Texas-area manufacturers expanded to 17.6 in September, that’s up from 6.8 in August. While the data covered only one region of the U.S., traders saw the report as a signal of demand from the world’s second-largest copper consumer, after China.
“The Dallas Fed data pushed copper up slightly,” Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago, told the Wall Street Journal.
A buoyant dollar puts pressure on commodities priced in U.S. currency, making them more expensive for buyers outside of the United States.
“I strongly think that the dollar will remain strong and this is going to keep the pressure on the demand side for metals,” Naeem Aslam, chief market analyst at Ava Trade, told several publications.
A strong reading of U.S. non-farm payrolls data due on Friday could help add to speculation about when the United States will start to raise interest rates and help boost the dollar.
Another key factor in the current copper market is this week’s release of U.S. pending home sales figures. Analysts are predicting a minor monthly drop. An average home contains about 300-500 pounds of copper in wiring and plumbing, making housing data a key gauge for copper demand.
Benchmark copper on the London Metal Exchange (LME) closed up 0.4 percent at $6,742 after falling to a session low of $6,666 a ton, its weakest since June 16.
Earlier in trading, copper futures reached a three-month low of $3.0125 a pound after China posted its first decline in industrial profit in two years. Chinese industrial profit fell 0.6% in August from a year earlier, fueling worries that the world’s No. 2 economy could slow further.
Concerns about the outlook for demand from China, which consumes as much as 40 percent of global refined copper, are also hanging over metals prices after data showed industrial profits fell 0.6 percent, reversing July’s 13.5 percent rise.
Investor are waiting anxiously for this Wednesday’s official reading on China’s factory sector growth. It is expected to show that growth most likely steadied in September as factory orders held up, providing some welcome relief for those who worry the Chinese economy is quickly losing steam.
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