Exclusive Features

Copper – Instant Gratification Will Have to Wait

By Jim Williams

Copper looks to rebound this week after its first 'bad' week in over a month. The red metal finished last week down 1.81%, the first weekly fall in five weeks. Experts point to a couple of factors behind the dip in copper – a stronger dollar at the end of last week and some disappointment surrounding the end of the Chinese party congress.

Reports released this morning show China's official manufacturing PMI missed expectations in October, coming in at 51.6, with both production and demand falling during the country's week-long national holiday.

Expectations were high going into last week's Chinese party congress – the twice-a-decade meeting where the country lays out its political and economic futures. Most of the news out of the meeting focused on where the world's second largest country will be years from now, not the last few months of 2017.

“Markets love immediate gratification, and when it comes to the future plans and growth in China, the “new normal” is a plan for years and decades to come rather than for a quarter or two,” points out Andrew Hecht of Seeking Alpha. “While prices remain close to recent highs, we could be entering a corrective period, and both copper and the dollar could be the perfect indicators when it comes to buying a dip or avoiding the sector that has been a superstar so far in 2017 for the rest of the year and going into 2018.”

The dollar dropped on Monday and again in early morning trading Tuesday to push copper to $3.11 as the U.S. markets opened for business this morning.

The focus now shifts to tomorrow's Fed meeting and Friday's U.S. jobs report for October to see which way the markets will go. The Fed's two-day meeting will most likely be one of the last for Fed Chair Janet Yellen. Fed Governor Jerome Powell is expected to get the nod to be her replacement. According to a Seeking Alpha report this morning, the Fed is not expected to take any actions when it releases its statement tomorrow, though it could point markets toward a rate hike at its December meeting.

Thanks to our friends at Investing.com, here is a look at some of the events that could affect the markets this week.

Tuesday, October 31

China is to publish official data on manufacturing and service sector activity.

The Bank of Japan is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

The euro zone is to publish preliminary data on inflation and third quarter economic growth.

Canada is to release data on economic growth and raw material price inflation. Later in the day, Bank of Canada Governor Stephen Poloz is to testify before the House of Commons Standing Committee on Finance, in Ottawa.

The U.S. is to release a string of reports including data on the employment cost index, business activity in the Chicago region and consumer confidence.

Wednesday, November 1

The UK is to release a report on manufacturing activity.

The U.S. is to release the ADP nonfarm payrolls report and later in the day the Institute for Supply Management is to publish its manufacturing index.

The Fed is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision.

Thursday, November 2

Australia is to release data on the trade balance and building approvals.

The UK is to release a report on construction activity.

The Bank of England is to announce its latest interest rate decision and publish its meeting minutes. BoE Governor Mark Carney is to hold a press conference to discuss the decision.

The U.S. is to release the weekly report on initial jobless claims along with data on labor productivity and costs.

New York Fed President William Dudley is to speak.

Friday, November 3

Financial markets in Japan will be closed for a holiday.

Australia is to report on retail sales.

China is to publish its Caixin services index.

The UK is to release a report on service sector activity.

Canada is to release its latest employment report along with trade data.

The U.S. is to round out the week with the nonfarm payrolls report for October as well as data on trade and factory orders and the ISM is to publish its non-manufacturing index.

Tagged with , ,

Comment on the story

Your email address will not be published. Required fields are marked *