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Copper Update: Streak Snapped?

By Jim Williams

Copper investors woke up to good news this morning as the price per pound traded higher in London. If this movement holds throughout the day in the U.S. markets it would snap a four-day losing streak for the red metal and hopefully start a trend to end the month-long downward trend for the red metal.


https://www.dailyfx.com/copper-prices

Today's positive news can be attributed to a rally in oil prices and on longer-term expectations that demand will grow and supply remain constrained. Also helping the cause, the Asian Development Bank raised its outlook for China's economic growth this year on the back of strong domestic consumption.

“Judging by its price action, copper is undergoing a long overdue correction,” Metal Bulletin analyst Andy Farida said on their website about the recent month-long slide. “But so far, the pullback is considered healthy and showed no sign of panic selling. Instead, this should test how strong the underlying support is and if the dips will attract late buyers to enter again,” Farida added.

Frequent tED contributor, Andrew Hecht of Seeking Alpha chimed in as well. “Copper took the stairs up and the elevator down,” Hecht notes about the recent slide in copper. “The current sell-off in copper could be creating another opportunity to buy the red metal and the shares of those who produce it before the market once again turns around, which is not out of the question given the performance and trend in the U.S. dollar.

“I believe copper will find a bottom once again sooner rather than later,” concludes Hecht.

Contributing to Copper

  • The dollar index was up 0.27% to 92.85
  • New home sales data in the U.S. is on today's economic agenda
  • U.S. Federal Open Market Committee chairwoman Janet Yellen is scheduled to speak at the National Association for Business Economics' annual meeting in Cleveland – we will keep an ear to the ground to see if she provides any hints about a rate increase later in 2017

Other News to Watch
We will keep an eye on the impact of Sunday's election in Germany where Chancellor Angela Merkel won her fourth term. The aforementioned Andrew Hecht wrote an article prior to the election telling us to Keep An Eye On Europe For The Next Big Move In Markets.

Plus, China is set to publish its Caixin manufacturing PMI on Friday.

Both items could play a major role in the future price of copper.

 

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