Analysis and Recommendations: Copper is in a pickle after diverging Chinese data was released over the past two days with the official manufacturing PMI
Copper is in a pickle after diverging Chinese data was released over the past two days with the official manufacturing PMI missing the expectation of 50 and reported at 49.8 meaning an ongoing contraction which lowers the demand on metals. The private PMI released this morning remained on contraction but printed higher than forecast balancing the reports. Copper is trading at 2.315 down 2 points. Palladium tumbled $13.38 to trade at 663.88.
Copper dipped to a one-month low on Monday after China’s factory activity faltered last month, raising concerns that successive easing measures in the world’s top metals user are failing to jump start the real economy.
China’s factory activity fell for an eighth straight month in October but at a slower pace as export orders flickered into life, a private survey showed on Monday, pointing to continued sluggishness in the world’s second-largest economy.
“Markets are certainly not factoring in any significant boost from new easing measures in the short term,’’ said analyst Daniel Hynes of ANZ in Sydney. “While we’re a bit negative on the macro side, I think we have gotten past the cyclical lows in copper.’’
Copper prices marched lower after Federal Reserve officials said an interest-rate increase was still a viable policy option for 2015, highlighting their December meeting as the venue for reviewing whether the U.S. economy can shoulder higher borrowing costs. The policy shift is expected to boost the dollar and make dollar-denominated copper more expensive for buyers who use other currencies to fund their metals purchases.
“If they do raise, that’s bearish copper because it would force the dollar higher versus virtually everybody else,” said Ira Epstein, a broker with Linn & Associates in Chicago.
Some investors cut copper holdings on Friday as losses in China’s stock market fanned concerns about the country’s economic health. The Shanghai Composite Index closed down 0.1% on Friday. China is the world’s top copper buyer, driving about 40% of global demand for the metal.
Today’s economic releases:
Cur. |
Event |
Actual |
Forecast |
Previous |
|||
AUD |
AIG Manufacturing Index (Oct) |
50.2 |
|
52.1 |
|
||
AUD |
Building Approvals (MoM) (Sep) |
2.2% |
2.0% |
-9.5% |
|||
CNY |
Caixin Manufacturing PMI (Oct) |
48.3 |
47.5 |
47.2 |
|
||
EUR |
German Manufacturing PMI (Oct) |
52.1 |
51.6 |
51.6 |
|
||
EUR |
Manufacturing PMI (Oct) |
52.3 |
52.0 |
52.0 |
|
||
GBP |
Manufacturing PMI (Oct) |
55.5 |
51.3 |
51.8 |
Upcoming Economic Events that you should be monitoring:
Tuesday, November 3, 2015
Cur. |
Event |
Actual |
Forecast |
Previous |
|
||
|
Japan – Culture Day |
||||||
AUD |
Interest Rate Decision (Nov) |
|
2.00% |
2.00% |
|
||
GBP |
Construction PMI (Oct) |
|
58.8 |
59.9 |
|
||
NZD |
GlobalDairyTrade Price Index |
|
|
-3.1% |
|
||
USD |
Factory Orders (MoM) (Sep) |
|
-0.9% |
-1.7% |
|
Government Bond Auctions
Date Time Country
Nov 03 10:10 Austria Holds RAGB bond sale
Nov 04 15:30 Sweden Announces details of Bond on 11 Nov
Nov 04 N/A Holland Announces details of Bond on 10 Nov
Nov 05 09:30 Spain Auctions Bonos
Nov 05 09:50 France Auctions OATs
Nov 05 10:03 Sweden Holds I/L bond auction