Copper Weekly Fundamental Analysis – January 25-29, 2016 -Forecast

Weekly Analysis and Recommendations:

Copper prices closed just a lick over the $2 price level after the strong dollar weighed on the metal, but the lack of demand also pressured the price as lackluster data around the globe and a downward revision of growth from the IMF cause the metal to weaken. Copper witnessed a weekly gain of 3.20% after taking a significant tumbled earlier in the week.

On Monday, China’s National Bureau of Statistics reported the 2015 producer-price index for manufactured goods declined 5.2 per cent. The purchasing price index for manufactured goods declined by 6.1 per cent. However, a weak trend overseas as base metals continued to suffer from slowing growth in China, the world’s biggest consumer, restricted the gains.

The metals avoided selling off two days ago while equities weakened but they did manage to rally yesterday as equities rebounded. This suggests the base metals may be tired on the downside, at least for now. The metals closed up an average of 1.4 percent yesterday, led by zinc and lead, which climbed around 1.8 percent, Aluminum was the laggard, with a 0.7-percent gain, while copper closed up 1.2 percent at $4,438.

The base metals are edging higher from recent lows so perhaps sentiment is turning slightly less bearish but we have seen all too many times before that rallies have been squashed so we need to be prepared for that again.

Still, generally the tighter supply fundamentals have largely been ignored by the relentless price declines but they will be tightening up supply – at some stage prices may put in a delayed reaction for which we need to be prepared.

For now, the technical indicators look stronger than the price action so we wait to see if prices catch up. The stronger-than-expected Chinese copper imports should not be too surprising given the LME/Shanghai copper arb window has been open for a while now but it suggests the copper market ex-China may be tightening more.

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.

Major Economic Events for the week:

 

Upcoming Government Bond Auctions

Date Time Country 

Jan 25 11:30 Germany EUR 1.5bn Jan 2017 Bubill

Jan 25 13:00 Norway Details of bond auction on Jan 27

Jan 25 17:20 Italy Details of BTP/CCTeus on 28 Jan

Jan 26 11:10 Italy Holds CTZ/linker bond auction

Jan 26 n/a US Holds 2-year note auction

Jan 27 11:05 Norway Holds bond auction

Jan 27 11:30 Germany EUR 1bn 2.5% Aug 2046 Bund

Jan 27 17:20 Sweden Details of bond auction on 03 Feb

Jan 27 n/a US Holds 2-year FRN auction

Jan 27 n/a US Holds 5-year note auction

Jan 28 11:03 Sweden Holds I/L bond auction

Jan 28 11:10 Italy Holds BTP/CCTeus auction

Jan 28 n/a US Holds 7-year note auction

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11