Copper Monthly Fundamental Forecast – May 2016

Copper will enter the month of May at 2.278 seeing a gain this month of 4.4% and is expected to bounce around in May but end up close to its currently level. This coming week Chinese data might cause some volatility. the weakness in the Chinese economy, which has been compounded by the weak-yen policies in Japan (which threatens China’s king-of-exports throne).  And we know, based on history, Chinese policymakers won’t sit back and let weak global demand and a currency war from Japan undo the path of their economy.

They’ve already reversed course on their currency policy of the past decade, as they’ve begun taking back some of the appreciation of the yuan of the past 10 years.  And they’ve already responded with more rate cuts and bank stimulus.  But with growth running at recession-like levels in China (even at 6%), expect them to do more, maybe a lot more.

That plays in perfectly with what we have expected to be the biggest theme of the year for markets – surprisingly aggressive action from China to stimulate their economy and, in turn, fuel the global economy and a recovery in commodities. (Kitco)

Comex copper prices also managed to take some gains for the week, bumping up 0.39 percent to $2.29 per pound Prices fell mid-week on waning industrial demand for the red metal, and on news that LME copper stocks had reached their highest level this month, according to Bloomberg. However, copper prices were back on the rise on Friday after weak US jobs data pushed the dollar down. Copper is expected to remain between the 2.21 – 2.30 level this month.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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