Copper - July 10, 2021 - Weekly Outlook - Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
(Time Zone: UTC)
LME Copper prices has a very choppy trading week but settled higher.
Initially, prices fell after China's National Food and Strategic Reserves Administration said that it would continue to release stocks in the near future after completing the auction of 100,000 tonnes of copper, aluminium and zinc this week.
Also weighing on copper has been weak data from top metals consumer China while monthly orders for German-made goods in May showed the sharpest slump since last year's first coronavirus lockdown.
However, prices recovered from the lows of the week supported by slightly dovish Fed and China move.
The June FOMC minutes confirmed that the Federal Reserve is edging closer to tapering asset purchases. At the same time, the minutes also showed that the substantial further progress it wanted to see has not been met.
Additionally, Chinese authorities said that they will cut the amount of cash that banks must hold as reserves, releasing about 1 trillion Yuan ($154.2 billion) in long-term liquidity to underpin its post-pandemic economic recovery.
Meanwhile, China's factory gate prices rose at a slightly slower pace in June, in line with expectations, while consumer inflation also eased, allaying investors' concerns that China could impose further curbs on commodity trading.
The move from China to support the economy will continue to lend support prices next week.
Firmer seasonal demand and renewed buying by investors will also lend support.
However, investors will be wary of another rise in covid-19 infections globally.
Additionally, markets could also look to cues from Chinese GDP data for the 2nd quarter. According to a poll, the Chinese economy is expected to grow at 8.1% as against 18.3% in the 1st quarter.
China is also expected to release Industrial production numbers next week and poll suggest that the activity could slow down in June.
Apart from the data from China, markets could also look to cues from the U.S Core CPI and PPI data due in the early half of next week. Apart from the inflation numbers, investors will also look to cues from retail sales number in the latter half of next week.
Across the Atlantic, U.K CPI and jobs data along with Eurozone CPI number for June could have a small impact on the markets.
Technically, LME Copper could see a bullish momentum up to $9600-$9850 levels. Support is at $9330-$9050 levels.
On the domestic front, MCX Copper above 723 levels could see upside push up to 735-740 levels. Support is at 725-715 levels.
Strategy: - Copper July: - Buy on dips near 727.00, Stoploss 720.00 and a Target at 743.00.
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