SHANGHAI, Jul. 9 (SMM) – Interest rate cuts announced by China's central bank, the European Central Bank and Bank of England stoked investor worries that these countries' economic growth would be slower than anticipated. The US Department of Labor announced last Friday that the nonfarm payroll added by 80,000 in June, well below the expected 90,000, despite slight improvement compared with the previous month. Meanwhile, the US unemployment rate remained at 8.2% in the same month, an indication the US economic recovery still faces an uneven road. These meant that the US labor market already slipped all the way in Q2 as the monthly average nonfarm payroll merely increased by 75,000 in 2Q, significantly lower than 226,000 seen in 1Q. A steep drop in the US nonfarm payroll highlighted that the US economic recovery still falters following three years' recession, while the European debt crisis added to uncertainty in economy. In consequence, investors' risk appetites cooled rapidly and they rushed to the US dollar as a safe-haven, which pushed the US dollar index to a two-year high of 83.431. Commodity and stock markets, however, softened, with US equity markets closing down by 1%. LME copper thus gathered falling stream in the evening and tested support at USD 7,500/mt before closing the week at a fresh trough of USD 7,527/mt, a considerable loss of over 2%.
On Monday, market focus will shift to China, where the latest CPI and PPI figures will be released, and investors expect these figures to fall appreciably from previous ones. However, the US dollar index trended lower following a high open Monday with noticeable upside pressure, which will strongly support the low-end LME copper price. As such, LME copper will move between USD 7,500-7,580/mt during Monday's Asian trading session. The Shanghai Composite Index is likely to test 2,200. SHFE copper prices will start lower and then fluctuate feebly, with SHFE 1210 copper contract expected between RMB 54,500-55,200/mt. Spot copper offers are estimated between discounts of negative RMB 20/mt and premiums of positive RMB 80/mt versus SHFE 1207 copper contract.