Fundamentals

Fresh buying seen in Copper, open interest up 7.83%

Copper is getting support at 369.9 and below same could see a test of 367.8 level, and resistance is now likely to be seen at 373.2, a move above could see prices testing 374.4.

March 02, 2015 11:08

MUMBAI: Copper settled up 0.47% at 371.80 rose towards its highest in nearly two months after top metals user China cut interest rates at the weekend, but caution over faltering demand growth kept a lid on prices. On Saturday China’s central bank cut interest rates, just days before an annual meeting of parliament, in the latest bid to support the world’s second-largest economy, as its momentum slows and deflation risks rise. Also weakness in China’s vast manufacturing sector, aggravated by high real borrowing costs and weak demand, appears to have driven the central bank to speed monetary easing to ward off deflation.

While lastweek US real GDP for Q4 grew at an annualized rate of 2.2% QoQ, higher than 2.0% expected, but below Q3s 2.6%. The University of Michigans final consumer sentiment index for February was 95.4, beating 94 expected. The US Federal Reserves Vice Chairman Stanley Fischer indicated last Friday that the Fed is most likely to raise interest rates in this June or September, but the specific timing may be subject to the countrys economic performance. William C. Dudley, president of the Federal Reserve Bank of New York warned that the Fed confront more risks to raise rates early than to do so later.

Meanwhile Hedge funds and money managers nearly eliminated their bearish position in copper futures and options during the week to Feb. 24, U.S. Commodity Futures Trading Commission data showed on Friday. Technically market is under fresh buying as market has witnessed gain in open interest by 7.83% to settled at 11849 while prices up 1.75 rupee, now Copper is getting support at 369.9 and below same could see a test of 367.8 level, and resistance is now likely to be seen at 373.2, a move above could see prices testing 374.4.

Trading Ideas:

—Copper trading range for the day is 367.8-374.4.

—Copper gained after China cut interest rates at the weekend, but caution over faltering demand growth kept a lid on prices.

—China cut interest rate by 25 bps, now benchmark interest rates by 25 basis points to 5.35 percent.

—Prices were knocked back Friday after data showed a 32.6 percent surge in copper stocks in warehouses monitored by Shanghai Futures Exchange.

Courtesy: Kedia Commodity