Copper Fundamental Forecast – April 27, 2016

Copper reversed early morning gains to trade at 2.236 down 20 points as traders booked profits. Base metals prices yesterday showed some mixed move with falling Asian market before the meetings of the Central bank of USA and Japan. As per closing basis, copper, zinc and lead posted loss at both LME and MCX, while aluminum and nickel managed showing some gains. Copper suffered losses with falling crude oil prices and also cautious trading ahead of the FOMC and BoJ meets. Apart from this, world No. 1 copper producer Codelco said it will scale back plans for its Rajo Inca project to extend life of its Salvador deposit. As per the official statement, the company is looking at 130,000 tonnes processing capacity in a single day. Prices today at LME are still down other than lead which is almost flat.

The latest housing data showed that U.S. home purchases declined for a third straight month. A slowing housing market is bad for copper because the metal is prolifically used in wiring and pipes. In the U.S., construction accounts for about 40% of copper demand.

Recently, a weaker U.S. currency has boosted copper prices. On April 12 the U.S. dollar index fell to an eight-month low. Although it has recovered since then, it continues to lose value versus commodity based currencies. The housing data does not add support for the Fed to further increase interest rates, and if the Fed stays put on interest rates, this could mean a pullback in the U.S. dollar. A weak U.S dollar is good for dollar denominated commodities, such as copper, because it makes them more affordable for holders of international currencies to purchase. (Economic Calendar)

Another bearish factor for copper is the fact that the market swung to a surplus in January. According to a report compiled by Reuters, citing data compiled by the International Copper Study Group, in January the world refined copper market showed a 56,000 ton surplus compared with a 50,000 ton deficit in December, and a 15,000 ton surplus in the same period a year earlier. World refined copper output in January was 2.01 million tons.

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:

Wednesday, April 27, 2016

Government Bond Auctions

Date Time       Country           Auction

Apr 26 11:10 Italy Holds BTP€i auction

Apr 26 19:00 US Holds 2-year note auction

Apr 27 11:03 Sweden Holds bond auction

Apr 27 11:10 Italy Holds CTZ auction

Apr 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Apr 27 19:00 US 2-year FRN, 5-year note auctions

Apr 28 11:10 Italy Holds 5yr/10yr bond auctions

Apr 28 19:00 US Holds 7-year note auction