Copper Fundamental Forecast – February 5, 2016

Analysis and Recommendations:

Copper soared 17 points today on the back of the weak US dollar and hopes of Chinese stimulus. Copper has been plunging over the last few months as demand from Asian has declined. While the fall in copper prices may be too strong from the short-term perspective, medium-term fundamentals do not favor any significant rise in the price of copper. Analysts believe that the combination of faster growth in refined copper production along with a slower improvement in demand mainly because of the growth deceleration in China – will drive the prices back to their current levels in the medium term. The Fed’s tightened monetary policy may also contribute to negative price developments expressed in dollars in 2016. The uncertain situation in China poses a negative risk to the price of copper – even in the short term.

Copper hit a one-month high as inventories declined, oil prices bounced and traders continued to reverse bets on falling prices ahead of the Lunar New Year break. Also helping the metal, the dollar tumbled as skepticism over rate hikes grew following weak US services data. A soft dollar makes metals priced in the currency cheaper for non-US investors.

Oil rallied on fresh talk of output cuts, tempting investors into commodity funds that include metals, while available or “on-warrant” London Metal Exchange copper stocks fell to their lowest since January 2015.

“There’s been short-covering metals have been pushing through important moving-day averages (and) stocks continue to dip. You can detect a shift in mood.

It was all doom and gloom mid-January (but) this push up has made people more constructive,” said Macquarie analyst Vivienne Lloyd.

Copper prices have been building a base above $4,500 a tonne after hitting a six-year low in mid-January.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Friday, February 5, 2016

Government Bond Auctions

Date Time and Country

Feb 04 11:50 France Holds bond auction

Feb 04 17:20 Sweden Details of I/L bond auction on Feb 11

Feb 08 16:20 Italy Details of bond auction

Feb 09 11:00 Netherlands Holds DSL auction

Feb 09 11:00 Austria Holds bond auction

Feb 09 11:30 Germany Holds I/L bond auction

Feb 09 11:30 UK 0.125% 2026 Gilt linker auction

Feb 09 n/a UK Details of Gilt auction on Feb 17

Feb 09 19:00 US Holds 3-year note auction

Feb 10 11:30 Germany Euro 5bn Mar 2018 Schatz

Feb 10 17:20 Sweden Details of bond auction on Feb 17

Feb 10 19:00 US Holds 10-year note auction

Feb 11 N/A Italy Euro 4-5bn 30-yr syndicated bond auction

Feb 11 11:03 Sweden Holds I/L bond auction

Feb 11 11:10 Italy Announces details of bond auction

Feb 11 11:30 UK 3.5% 2045 Gilt auction

Feb 11 19:00 US Holds 30-year bond auction

Feb 11 n/a US Details of 30-yr TIPS auction on Feb 18

Feb 12 11:10 France Details of bond auction on 18 Feb