COPPER EXPECTED ON SIDELINES, BLEAK ECONOMIC DATA FROM US WEIGHS
DATE: 22/06/2012
Copper is likely to trade on sidelines during the morning session on Friday, 22nd June headed for a weekly loss. The focus on ahead of a closely watched independent audit of Spain's banking sector and concerns on the deteriorating global economy weighs on the sentiment. However, the volumes may be lower as the major metal consumer China market was shut for a public holiday. Copper is likely to find support at Rs 413 per kg and Rs 410 per kg and resistance at Rs 4185 per kg and Rs 420 per kg.
Copper snapped earlier gains and slumped on Thursday, 21st June as the bleak economic data from the major economies such as China and Europe that showed a contraction in the manufacturing activity prompted investors to stay onto safe haven dollar and pulled down the metal. Also, the disappointing raft of US economic data released during the late session also hammered the metal.
Copper plunged by 1.8% at $7429 per tonne on Thursday at LME. Comex Copper for the most active July contract dropped by 2.6% or 9 cents at $3.298 a pound. MCX Copper dropped by 1.6% or Rs 6.9 at Rs 414.6 per kg and tested an intraday high at Rs 421.5 per kg and low at Rs 414.6 per kg.
The dollar index buoyed by 1.2% at 82.35 against the basket of 6 major currencies as the concerns on the global economic growth prompted dollar as safe haven. Global economic woes pertaining to major economies such as China, US and Europe slammed the metal market yesterday. Rising expectations that the European Central Bank will further ease monetary policy to support growth in the region's crisis-ridden economies, such as Spain, Italy and Greece pared huge losses in the metal space.
Even though Spain reached its target sale, the soaring bond yields stoked the investors fears of country's economic growth. Spain sold a total of 2.2 billion euros of various maturities. An auction of April 2014 paper fetched an average yield of 4.71%, versus 2.07% seen at a prior auction of same-dated paper
The euro-zone manufacturing purchasing managers index shrank for a fifth straight month in June. Although it was unchanged at 46 in June from May, it still remained in contraction territory.
China's manufacturing activity contracted further in June, as per Markit Economics. The flash HSBC purchasing managers' index for the manufacturing sector fell to a seven-month low of 48.1 in June from 48.4 in May. The manufacturing output index fell to 49.1 in June from 49.7 in May.
Meanwhile, U.S. factory growth grew at its slowest pace in 11 months. Markit said its U.S. flash manufacturing gauge fell to 52.9 in June from 54.0 in May. A further sign of weakness came from the sales of previously owned homes fell 1.5% in May.
Another sour reading from the jobs market also weighed. The number of Americans filing for jobless benefits fell slightly last week by 2000 to a seasonally adjusted 387,000, though the prior week's figure was revised higher, indicating the labour market is sputtering.
POWERED BY: COMMODITY INSIGHTS
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