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Copper Futures Rise Despite Lackluster Jobs Report and Factory Orders Declines

Strategic Insights

— 2 min read

Copper futures continued their upward trend despite a disappointing U.S. jobs report and declines in factory orders, as investors took advantage of the weakened U.S. dollar and bought back previously sold positions. The most-actively traded contract for September delivery rose 3.9 cents, or 1.4%, to settle at $2.9160 a pound on the Comex division of the New York Mercantile Exchange. Analysts attributed the gains to the strengthening of industrial commodities, as the jobs report and factory orders data were not as weak as anticipated.

Key Takeaways:

  • Copper futures rose 3.9 cents, or 1.4%, to settle at $2.9160 a pound, despite a lackluster U.S. jobs report and declines in factory orders.
  • The most-actively traded contract for September delivery saw gains on the Comex division of the New York Mercantile Exchange.
  • Analysts attributed the gains to the strengthened U.S. dollar, which made copper less expensive for buyers using other currencies.
  • Bart Melek, global commodity strategist with BMO Capital Markets, noted that when looking deeper into the payroll numbers, they are not as morose as the headline data would suggest.
  • The jobs report showed a nonfarm payroll decline of 125,000, but the unemployment rate unexpectedly fell to 9.5% in June from 9.7% in May as people left the workforce.
  • The dollar fell against the euro, adding to a string of recent disappointing economic news, which typically supports dollar-denominated copper.
  • Ralph Preston, senior market analyst with Heritage West Financial, stated that the jobs report "wasn't as bad as anticipated."
  • Copper was stronger even ahead of the data, which some analysts attributed to traders taking advantage of potential bearish expectations in the market.
  • Larry Young, senior portfolio manager with Covenant Trading, noted that some traders repurchased previously sold positions to square up their books ahead of the extended U.S. Independence Day holiday weekend.

Statistics:

  • Copper futures rose 3.9 cents, or 1.4%, to settle at $2.9160 a pound.
  • The most-actively traded contract for September delivery saw gains on the Comex division of the New York Mercantile Exchange.
  • Nonfarm payrolls fell by 125,000 as temporary census workers lost their jobs.
  • Unemployment rate unexpectedly fell to 9.5% in June from 9.7% in May as people left the workforce.
  • The dollar fell against the euro.
  • Overnight strength in base metals prices spilled into New York copper trading, with a rise of 619 metric tons for the week to 124,558.
  • Comex inventory data showed a decline of 2,125 metric tons to 447,300.
  • Demand expectations will remain the key focus for the market in the coming months, with analysts predicting a normal pause in recovery momentum.

Sources:

  • Dow Jones Commodities News via Comtex
  • Bart Melek, global commodity strategist with BMO Capital Markets
  • Ralph Preston, senior market analyst with Heritage West Financial
  • Larry Young, senior portfolio manager with Covenant Trading
  • Sterling Smith, analyst with Country Hedging
  • Barclays Capital research note
  • Shanghai Futures Exchange weekly data
  • Comex inventory data
  • Matt Whittaker, Dow Jones Newswires
  • Dow Jones & Company, Inc.

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