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Copper: Spotlight on the Fed, With China in Focus

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Copper: Spotlight on the Fed, With China in Focus

This is an important week for the price of copper – and the markets in general.

The financial world will be watching the United States today as new Fed Chair Jerome Powell answers questions from both houses of Congress in semi-annual testimony.

Copper inched up in overseas trading in anticipation of Powell’s performance on Capitol Hill – oh, and because the dollar softened a bit to open the week. The dollar pulled back 0.1 percent against a basket of currencies ahead of the speech.

Investors are expected to watch Powell’s testimony closely for clues on the outlook for U.S. monetary policy. Reuters reports this morning that many investors are nervous about the Fed’s policy normalization following years of stimulus.

While the new Fed Chair steps into the spotlight today, the focus on copper will shift back to the East later in the week as China is scheduled to publish PMI data on manufacturing and service sector growth tomorrow and follow that up with its Caixin PMI report Thursday. Both PMI reports should provide a barometer on the Chinese economy. According to the Wall Street Journal, “…growth momentum may lose some steam as the Lunar New Year, falling in February this year, led to a shutdown of factories and services ahead of and during the holiday.”

All of these big events have copper investors waiting cautiously to see which way the momentum will swing.

In the meantime, the red metal opened this morning a tick under $3.18 a pound.

Copper in London has managed to stay above the proverbial $7,000 plateau since Valentine’s Day.

ICBC Standard Bank said in a note published this morning that it still sees a positive fundamental outlook for base metals, forecasting across-the-board deficits in 2018 and through to 2020.

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

Tuesday, February 27
New Zealand is to produce data on trade.
In the euro zone, Germany is to release preliminary inflation data.
Fed Chairman Jerome Powell is to testify on the Semiannual Monetary Policy Report before the House Financial Services Committee, in Washington.
The U.S. is to release data on durable goods orders and consumer confidence.

Wednesday, February 28
New Zealand is to publish a report on business confidence.
China is to publish PMI data on manufacturing and service sector growth.
The euro zone is to release preliminary inflation data.
The U.S. is to publish revised data on fourth quarter growth, as well as a report on business activity in the Chicago region and data on pending home sales.

Thursday, March 1
Australia is to release data on private capital expenditure.
China is to publish its Caixin PMI.
The UK is to publish data on manufacturing activity.
The U.S. is to publish what will be a closely watched report on personal income and spending, which includes the personal consumption expenditures inflation data, the Fed’s preferred metric for inflation.
The U.S. is also to report on jobless claims and the Institute of Supply Management is to release data on manufacturing activity.
Fed Chairman Jerome Powell is to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington.

Friday, March 2
In the euro zone, Germany is to release data on retail sales.
The UK is to publish data on construction activity.
Bank of England Governor is to speak at an event in Edinburgh.
Canada is to publish its monthly report on economic growth.
The U.S. is to wrap up the week with revised data on consumer sentiment.

Further Reading

Here are a couple of copper-related articlesyou may find of interest:

Copper Explained – Seeking Alpha
4 Reasons Why Commodities Will Attract Lots of Interest – Andrew Hecht

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Jim Williams

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