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Copper Is In A Mood

Copper Is In A Mood

By Jim Williams

Copper is trying to shake off the dust after a long holiday weekend. Investors honored the Memorial Holiday here in the states, as well as a Spring bank holiday in the UK. Add this to the markets in China and Hong Kong being on holiday break as well and that leaves us to look forward.

Industry analysts expect the sluggish start to continue as we wait to see data from tomorrow’s Chinese manufacturing PMI data report. Those close to the industry predict tomorrow’s announcement might add support to the argument that this year’s growth has peaked.

Another key factor to base metals this week, including copper, is the U.S. Nonfarm payrolls data scheduled to be released Friday morning.

Nonfarm Payrolls measures the change in the number of people employed during the previous month, excluding the farming industry. A higher than expected reading should be taken as positive/bullish for the U.S. dollar, while a lower than expected reading should be taken as negative/bearish. Early indications show an expected job growth of 185,000 positions. If true, this would lend support to the case for an interest rate hike as early as June.

A report last Wednesday put a big dent in copper’s armor, as Moody’s Investors Service downgraded China’s credit ratings for the first time in nearly 30 years. Moody’s said it made its decision based off the expectation that the financial strength of the Chinese economy will erode in coming years as growth slows and debt continues to rise. To put this in perspective, the last time Moody’s downgraded the Chinese sovereign debt rating was in 1989.

This news just adds fuel to the fire for those wondering what the future holds for the Chinese economy. And, if you have been following the price of copper for any length of time, you know as China rolls, so does the red metal.

We will see what kind of mood investors are in after tomorrow’s PMI numbers are released. Be sure to come back next week as we report on their impact as well as any details connected to the Nonfarm Payrolls report.


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