SHANGHAI, Jun. 18 (SMM) – Last Friday, the positive news that G20 would increase liquidity continued to lift the US and European markets. However, the US later announced its consumer sentiment sank to a 6-month low in early June, and that its manufacturing output contracted in May for the second time in three months. Investors, though, interpreted this as the latest signal that the US economy may have cooled and lay a foundation for the Federal Reserve to loosen monetary policy again. The US dollar index thus fell below the support at the 30-day moving average of 81.73, while US equity markets surged by nearly 1%. LME copper extended gains, touching a high at USD 7,562/mt and finally ending at USD 7,560/mt, the first weekly increase in the past seven weeks. In other news, LME copper stocks increased by 4,375 mt last Friday, and rose by 19,775 mt during the whole week.
The latest poll suggests that the pro-bailout party in Greece won more support and helped the euro start nearly 1% higher this morning. The final result of the Greek election will be released at 1 pm Monday, and markets are optimistic about this result. In this context, SMM believes LME copper will experience a wave of increase during Monday's Asian trading session, with prices expected to move between USD 7,530-7,650/mt. The Shanghai Composite Index will stand above the 10-day moving average. SHFE copper will move higher after starting higher, while SHFE 1209 copper contract prices will hover in the RMB 55,000-55,800/mt range. Spot copper premiums are estimated between positive RMB 100-200/mt versus SHFE 1207 copper contract.