SMM Morning Review - 2010/12/6 Copper Market

SHANGHAI, Dec. 6 (SMM) – After a series of positive economic data was released in the US last week, the US non-farm employment payrolls only increased 39,000 in November based on data released late last week, well below the expected level of 140,000, and the jobless rate unexpectedly rose to 9.8%, increasing market risk aversion sentiment. Meanwhile, the US Federal Reserve’s Chairman said there is possibility that the government will purchase more bonds. The US dollar, as a major risk-aversion tool, will be supported after the risk aversion sentiment increases. However, the Fed’s possible action to purchase more government bonds will weigh down the US dollar. In this context, market payers will pay more attention to technical movements of the US dollar index. In other news, China has set “a stable monetary policy” as the tone for its monetary policy in 2011, according to its Central Economic Work Conference held in earlier December.

Last Friday, the US dollar index fell as low as 79, and then found support at the 20-day moving average, and finally closed at 79.14, a drop of 1.35%. However, LME copper prices failed to advance robustly along with a weaker US dollar, with the highest and lowest level for LME copper prices at USD 8,770/mt, and USD 8,646/mt, respectively. Finally, LME copper prices closed at USD 8,739/mt, up only 0.39%. Positions were up slightly, and trading volumes continued to drop, a sign of lack of further upward momentum in the LME copper market.

During Monday’s Asian trading hours, the US dollar index will fluctuate between 79.2-79.5, and LME copper prices will move in the USD 8,700-8,800/mt, and the SHFE three-month copper contract prices will be in the price band of RMB 64,800-66,000/mt on Monday.  

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