Copper Futures Rally on Weaker Dollar and Economic Data

Strategic Insights -

Copper futures surged to their highest price in nearly two months, driven by a weaker dollar, economic data, higher equities, and firmer commodities. The rally was fueled by participants buying back previously sold positions, with the most-active March copper contract rising 11.45 cents, or nearly 7.8%, to settle at $1.5865 a pound on the Comex division of the New York Mercantile Exchange. Analysts attributed the surge to short-covering, with BNP Paribas' Anne-Laure Tremblay noting that copper was supported by bouts of short-covering. The rally was also boosted by earlier equities market strength and a weaker U.S. dollar, which helped copper prices.

Key Takeaways:

  • Copper futures rallied to their highest price in nearly two months, driven by a weaker dollar, economic data, higher equities, and firmer commodities.
  • The most-active March copper contract rose 11.45 cents, or nearly 7.8%, to settle at $1.5865 a pound on the Comex division of the New York Mercantile Exchange.
  • Analysts attributed the surge to short-covering, with BNP Paribas' Anne-Laure Tremblay noting that copper was supported by bouts of short-covering.
  • Existing-home sales in December rose 6.5% to a 4.74 million annual rate from 4.45 million in November, according to the National Association of Realtors.
  • The Conference Board's index of leading economic indicators climbed 0.3% to 99.5.
  • Copper's rally wasn't backed by increasing demand, with Archer Financial Services' Stephen Platt noting that most people still think the recovery will be halting.

Statistics:

  • The most-active March copper contract rose 11.45 cents, or nearly 7.8%, to settle at $1.5865 a pound.
  • The intraday high of $1.6310 was the contract's strongest price since December 2, 2008.
  • Copper prices have plunged from their record front-month high of $4.27 last year.
  • Comex April gold settled more than 1.4% higher.
  • Nymex March crude was up 5 cents shortly after copper closed, but it had been stronger earlier.
  • Inventories of copper stored in London Metal Exchange warehouses rose 14,800 metric tons Monday, leaving them at 439,425.

Sources:

  • Dow Jones Commodities News
  • BNP Paribas
  • Sterling Smith, Vice President with FuturesOne
  • Standard Bank analyst Leon Westgate
  • Archer Financial Services' Stephen Platt
  • National Association of Realtors
  • The Conference Board
  • Dow Jones Newswires