SHANGHAI, May 29 (SMM) – Copper prices on the LME and SHFE will see greater volatility next week, SMM predicts.
Investors will eye US May CPI, PMI and non-farm payrolls, and Fed Chair Yellen’s speech for clues for the US Fed’s policy path. While previous manufacturing PMI turned out to be disappointing, US housing and labor markets continued improving and durable goods grew more than expected. Should CPI returns to 2% target, the US Fed will probably choose to raise interest rate without hesitation.
The share of people that support UK exit from the EU is close to the share of those who are against this move. The UK Treasury released a report, which warned that UK exit from the EU will push jobless rate up by 1.6-2.4 percentage points and will likely cause GDP to fall 3.6-6 percentage points. The report also warned that pound might depreciate as much as 30% in 2017. The UK’s Prime Minister and head of the UK Treasury hoped that this warning will help those who are hesitant about whether to vote for or against UK exit from the EU make their final decisions.
The US dollar index will stay high.
Crude oil prices will see corrections this week after big gains.
LME copper will fluctuate in a wide range of $4,630-4,750 per tonne this coming week.
Profit at large-scale Chinese industrial enterprises fell sharply during January-April. China’s manufacturing PMI is expected to fall in May and market expects yuan to depreciate further. Market liquidity will tighten in the middle of the year. The year-on-year growth in China’s M2 money supply will continue slowing down in coming months due to higher base in the same period last year when China pumped more liquidity into the market to boost flagging stock market.
The technical side is positive for SHFE copper. SHFE 1608 copper looks set to rise to 35,500-36,500 yuan per tonne.