SHANGHAI, Jul. 27 (SMM) – European Central Bank (ECB) President Mario Draghi said Thursday the bank would do everything to prevent the euro from breaking up, including taking the move to cut relatively high borrowing costs of some of the region's member states. He promised to do everything within his power to save the euro zone and said the ECB had the ability to solve problems. He also stated that high government borrowing costs have hurt the transmission mechanism of monetary policy, but they were in the ECB's mandate. In the meanwhile, Draghi refused to comment the chance of sovereign countries withdrawing from the bloc and said a united currency system was "irreversible". In response, the euro surged greatly in step with US equity markets, and helped drive commodity markets up from earlier lows. LME copper prices were lifted to as high as USD 7,573/mt after soaring through USD 7,500/mt. However, the US later announced economic figures showing that durable goods orders grew by 1.6% in June, flat with the revised 1.6% in May (compared with 1.3% in the previous month). The US initial jobless claims dropped to 353,000 last week, but the pending home sales index fell by 1.4% MoM in June, well below an increase of 0.2% anticipated by markets. The mixed data out of the US helped investors return to reasonable position and cut positions while turning their attention to the US GDP data for 2Q to be released Friday (if this data remains weak, it will become another evidence for the Fed to introduce easing measures). Besides, news came out that Greek leaders did not reach consensus on the two-year austerity plan, meaning that potential risks in Europe's debt crisis existed. In consequence, LME copper prices retreated and reversed previous gains before finally settling at the 5-day moving average of USD 7,469/mt, a slight loss of USD 10/mt.
Markets are awaiting the release of the US GDP data for 2Q Friday evening. The euro lacks further rising momentum and will mainly fluctuate strongly as longs take profit-taking. In this context, LME copper prices will test support at the 5-day moving average and drift slightly higher to USD 7,420 -7,520/mt during Friday's Asian trading session. Chinese domestic markets will extend sluggishness. SHFE copper prices will start higher, with longs and shorts holding growing divergence at RMB 54,500/mt, while SHFE 1211 copper contract prices will hover in the RMB 54,200-54,800/mt band. Spot copper offers are estimated between premiums of positive RMB 50-150/mt versus SHFE 1208 copper contract.