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Copper News: Weaker Dollar, Brexit and Trade Talks

Copper News: Weaker Dollar, Brexit and Trade Talks

Copper saw some positive movement in early Asian trade on Tuesday thanks to a weaker dollar and tracking stock markets higher after the European Commission agreed to changes in a Brexit deal.

The rollback with the dollar started Friday after a weak U.S. employment report was released. A softer dollar makes dollar-denominated metals like copper cheaper for holders of other currencies and typically boost prices.

Three-month copper on the London Metal Exchange climbed 0.4 percent to $6,434.50 in early trading, extending a slight gain from the previous session. Click on the chart below for live pricing per pound.

The positive start to the week may have been a surprise for some investors after Chinese equities suffered their worst day since October on Friday amid concerns about exports, growth and stubbornly slow trade negotiations with the U.S.

Speaking of U.S.-China trade talks, Chinese Vice Premier Liu He held a telephone call on Tuesday with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer on key issues in their trade talks, state news agency Xinhua said.

The two sides set the next steps in “working arrangements,” Xinhua added, without giving details.

White House economic adviser Larry Kudlow on Sunday said he is still “bullish” on the prospects of a deal with China.

“Across the board, the deal has to be good for the United States and for our workers, and our farmers, and our manufacturing,” Kudlow told Fox News Sunday. “It’s got to be good. It’s got to be fair and reciprocal and it’s got to be enforceable.”

The possibility of a trade deal being reached after months of mutual import tariffs have been a consistent source of optimism for investors navigating weak Chinese data in recent months, Kash Kamal, from BMO Capital Markets told Reuters.

“You’ve had hopes that a trade deal is incoming and blow after blow from economic data for the December-January period,” Kamal said. “It’s clear that speculative money is driving momentum.”

Copper’s supply and demand fundamentals are also playing into selling, with holdings at Chinese warehouses having more than doubled since mid-January as demand remains lower than expected after February’s Lunar New Year break.

Friday’s weak Chinese data came after markets were already reeling from the European Central Bank’s announcement of fresh stimulus measures on Thursday when it also unexpectedly pushed back its interest-rate increase guidance. Investors took those decisions as signaling caution on the health of the global economy, with data releases out of both Europe and China having concerned markets in recent months.

Inflation figures will also be closely watched after the Federal Reserve vowed to be “patient” and await incoming data before raising interest rates again. Data on U.S. consumer and producer prices are set to be released on Tuesday and Wednesday, respectively.

Other key economic reports in focus this week include U.S. new home sales and durable goods. Meanwhile, U.S. President Donald Trump will introduce his 2020 budget proposal on Monday after a delay caused by the government shutdown in January.

Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.

Monday, March 11

In the euro one, Germany released data on industrial production and trade.

The U.S. published retail sales figures for January.

Tuesday, March 12

The U.K. is to produce data on GDP growth and manufacturing production. The British parliament is to hold a vote on Prime Minister Theresa May’s Brexit deal.

UPDATE: “Today we have secured legal changes,” May said in a late-night news conference, exactly 17 days before the United Kingdom is due to leave the EU. Read more here.

The U.S. is to report on consumer inflation while Fed Governor Lael Brainard is to speak at an event in Washington.

Wednesday, March 13

In the U.K., the government is to release its annual budget statement.

The U.S. is to publish reports on durable goods orders and producer price inflation.

Thursday, March 14

China is to produce data on fixed asset investment and industrial production.

The U.S. is to release reports in initial jobless claims and new home sales.

Friday, March 15

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.

Canada is to release data on manufacturing sales.

The U.S. is to round up the week with reports on industrial production and consumer sentiment.

Further Reading

Why It’s a Good Time to Invest in Copper

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Jim Williams

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