Expectations for increased clarity about the denouement for tapering monetary stimulus policy in the U.S. prompted copper futures to hover on Wednesday, according to Bloomberg.
As the U.S. Federal Reserve prepared to release the minutes of last month's Federal Open Market Committee meeting later on Wednesday morning, analysts and investors were anticipating indications as to what the body has in mind for the near term when it comes to economy spurring measures. The U.S. Federal Reserve opted to slash monthly asset purchases by $10 billion.
The U.S. trails only China for world's largest consumer of the base metal, which is sensitive to domestic and worldwide economic developments due to its myriad uses in construction, manufacturing and other industry.
December policy meeting minutes "should be interesting in terms of revealing the split in votes from last month's decision to taper, as well as clues as to when the next round of tapering might be," states a Wednesday report authored by head of analytics sales Vicky Sanders with Marex Spectron Group in London, according to Bloomberg.
At 9:43 a.m. on Wednesday, copper futures edged up 0.06 percent, a 0.002-cent climb to $3.3615 per pound.
Supplies of the reddish metal, as monitored by the London Metals Exchange, dropped for a 45th consecutive session and amount to 351,675 tons. Despite the losses, that total is nearly twice as much as it was at the end of 2006, according to data held by Bloomberg.
"We are very far away from a 'tight' market," states a report penned by analyst Paul Gait with Sanford C. Bernstein Ltd., according to Bloomberg. "Inventory levels are still significantly higher than the lows seen in 2005 and 2006."
Dollar's gains impact futures
Reuters reports the base metal was impacted by the U.S. dollar's gains on Wednesday, worries about the economic recovery in China and anticipations about healthy development and growth in the U.S.
The greenback's midweek gains were linked with economic data noting the trade deficit of the U.S. contracted to its lowest level since 2010. That metric was influenced by the strong production of energy, which spurred increases among forecasts for growth and development.
Slowdown in China tugs down prices
The base metal touched its lowest value in about 14 days earlier this week as concerns spread about domestic issues in China. The government of the Asian nation released new standards to fortify how shadow-bank lending is overseen and regulated.
"There's counter-balancing forces, on the one hand inventories are being drawn on the other hand there's some degree of concern over China," analyst David Wilson with Citi told Reuters on Wednesday. "We've been sideways since January but prices have been up since December, and latest data showed money managers moving to net long positions."
The reddish metal also was impacted by jobless rates in the euro zone remaining stagnant for the eighth consecutive month in November. However, retail sales surged the most since 2002, which helped push European shares toward their top value in well more than five years.
The Wall Street Journal reports concerns about China are likely to linger considering the rough economic waters through which the country has navigated as of late.
Senior commodities broker Rob Montefusco with Sucden Financial said those concerns are germane to Chinese demand for the industrial metal, which also will impact the price of copper futures.
December growth in China was on the slower side, according to four of the most prominent purchasing managers' indices germane to industry in China. Those metrics were released this past Monday and last week.
Those underwhelming reports taken in unison might indicate another slowdown through which the Asian nation will have to wade through.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
© 2021 StoneX Group Inc. All Rights Reserved