SHANGHAI, Dec. 1 (SMM) – The US dollar climbed higher yesterday as market fears over the European debt issues remain. The US dollar index rose above 81, and reached as high as 81.42 before ending at 81.2 when LME copper market closed. In other news, the Chicago purchasing managers index rose to 62.5 in November from 60.6 in October according to the Institute for Supply Management-Chicago, higher than the expected level of 60. It was the highest reading for the index since April 2010. In addition, the US consumer confidence index reached 54.1 in November, above the expectations of 52.6, the highest level since June 2010.
In this context, LME copper prices fluctuated at around USD 8,270/mt when the US dollar advanced, and surged when the US dollar fell. Finally, LME copper prices closed at USD 8,387/mt, up as much as 1.9%, and both positions and trading volumes expanded. It indicates that copper market will be affected both by favorable economic data from the US, and the European debt issues in the short term. The US dollar remains attractive, while the US economy’s recovery will provide favorable outlook towards market fundamentals. The US dollar will remain strong unless market worries over the European debt issues fade away, especially when the US economic data is positive. In addition, the premium for cash metal over LME 3-month contract surged to USD 60/mt, and supply tightness will also support LME copper prices.
Hence, SMM believes LME copper prices will move between USD 8,280-8,400/mt, and SHFE three-month copper contract prices will fluctuate in the RMB 63,000-64,000/mt on Wednesday.
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