Copper weakness, market under long liquidation: kedia
Commodity Online | May 27 2016
UPDATED 12:31:19 IST

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Copper on MCX settled down -0.62% at 313.10 fell from the day's high hit by expectations that a likely U.S. interest rate rise in the next two months will boost the dollar, as prices headed for their worst month in half a year. Concerns about faltering growth in top metals user China also added to pressure on copper. Meanwhile the People's Bank of China will keep policy slightly loose to support the economy, which still faces downward pressure, the China Business News said on Thursday.

Three-month copper on the London Metal Exchange had slipped 0.1 percent to $4,658 a tonne, paring small gains from the previous session. Prices were eyeing a 1.7-percent weekly rise, trimming May's losses to 8 percent, which would still be its worst monthly showing since November. Underpinning the dollar and the case for a rate rise, U.S. business spending intentions weakened in April for a third straight month amid soft demand for machinery, but a surge in contracts to purchase previously owned homes to a 10-year high supported views economic growth was gaining speed.

Last week Copper continued their downtrend, tumbling amid a broadly stronger US Dollar, as better-than-expected economic data out of the country bolstered bets for a June rate hike by the Federal Reserve. Despite that, the industrial metal found a bit of support form indications of improving housing sector in China, world’s bigger copper consumer, accounting for around 45% of all consumption. Technically market is under long liquidation as market has witnessed drop in open interest by -0.36% to settled at 26710 while prices down -1.95 rupee, now Copper is getting support at 311.5 and below same could see a test of 309.8 level, and resistance is now likely to be seen at 316, a move above could see prices testing 318.8.

Trading Ideas:
--Copper trading range for the day is 309.8-318.8.
--Copper prices dropped dragged lower by expectations that a likely U.S. interest rate rise in the next two months will boost the dollar
--Some of the recent rise has been due to seasonally strong demand in China, which is likely to fade over coming months.
--Reflecting the weak demand outlook in China are falling premiums for copper shipments to Shanghai, have fallen to $55 a tonne, the lowest since February 2013.

Courtesy: Kedia Commodities