SHANGHAI, Apr. 16 (SMM) – Copper prices on the LME and SHFE markets will embark on a somewhat different path next week, SMM sees.

US Fed official Dudley is expected to give a dovish speech this coming week, due to lower-than-expected US March inflation data. US housing starts will maintain growth in March, while existing home sales will drop slower, as strengthening labor market will stimulate home buying. This should lift the US dollar index.  

The ECB expected during its March meeting that inflation will average just 0.1% in 2016 before climbing to 1.6% in 2018. The IMF explicitly supports negative interest rate by the ECB. These, combined with the issue surrounding possible UK exit from the euro zone, will also favor the US dollar.  

EIA data showed US crude oil stocks surged 6.6 million barrels to 536.53 million barrels two weeks ago. the OPEC cut global crude oil demand growth forecast by 50,000 barrels per day to 1.2 million barrels per day, citing economic slowdown in emerging markets. Should no agreement be reached during the meeting in Doha, crude oil will fall back to near $40/bbl. 

LME copper is being capped below the 20-day moving average, and should move widely between $4,680-4,850 per tonne. 

Market will continue digesting positive China Q1 economic data, especially foreign trade data and M2. M2 grew 13.4% year-on-year in Q1. Market expectations are growing for RRR cuts in April. Operating rates at copper processors will stay at high levels after big increase in March. Technically, SHFE 1606 copper will challenge resistance and fluctuate between 36,400-37,500 yuan per tonne.

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