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Latest Non-Farms Report Plants a Seed for Copper Prices

Latest Non-Farms Report Plants a Seed for Copper Prices

By Jim Williams

The Non-Farms Payroll report released last week is reaping havoc on the markets this week. On Monday, the dollar dipped to a seven-month low after jobs growth in the U.S. missed expectations.

Total non-farm payroll employment actually increased by 138,000 in May. While that number is above the “steady state” range according to Fed Chair Janet Yellen, it still came in a little softer than expected.

“London copper was steady on Monday, supported as the dollar weakened following a disappointing U.S. jobs report,” Reuters reports.

Several analysts expect last week’s report to play a key role in the Fed’s expected decision to raise rates later this month.

Angel Commodities, the firm that has its thumb on the pulse of the copper market, predicts the red metal will “trade sideways” today as investors keep an eye on Britain’s elections this week. Another key factor keeping copper at bay is the Chinese industrial production data set to be released on Thursday. As usual, that data will provide clues on China’s economic health. As we all know, what happens in China affects the price of copper globally.

The price of copper has been trapped in a range since early last month. Frequent tED contributor Andrew Hecht elaborates:

“Copper has been playing dead while other industrial commodities have continued to move lower,” states Hecht, of Seeking Alpha. “Copper is still leaning lower and it is possible that the red metal will retest the level from which it broke to the upside at $2.3135 last November. The weaker dollar favors copper but the trend is your friend and that path still points to a lower price for the red metal over the weeks ahead.”

Hecht points to two significant issues keeping copper investors in limbo. First, the optimism for infrastructure rebuilding that followed the 2016 Presidential election – which has since turned to pessimism. And second, as we reported last week, Moody’s’ recent downgrades of Chinese debt.

“Any surprise when it comes to congressional action or Chinese economic growth could lead to a price recovery,” concludes Hecht.

The International Copper Study Group (ICSG) released the 2017-2018 Copper forecast, indicating a larger than expected supply deficit for 2017 and 2018.

Mining the Net for More Copper Stories

We found an interesting article on Mining Journal’s web site titled Copper Coming Back to Earth. You can read the entire article here.


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