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Copper Prices Rally on Strong US Employment Data and Weaker Dollar

Strategic Insights

— 1 min read

The US employment picture showed an improvement, with 93,000 new private-sector jobs added in November, exceeding economists' expectations of a 70,000 gain. This positive economic data, combined with a weaker dollar, supported a rally in copper prices. The most actively traded copper contract, for March delivery, rose 6.45 cents, or 1.7%, to $3.8900 per pound on the Comex division of the New York Mercantile Exchange.

Key Takeaways:

  • The US private sector added 93,000 new jobs in November, the largest monthly gain in three years, according to a report published by Automatic Data Processing Inc. (ADP) and consultancy Macroeconomic Advisers.
  • The report exceeded economists' expectations of a 70,000 gain, with 23,000 more jobs added than predicted.
  • Copper prices rallied on the news, with traders considering strong employment data an indicator of growing future copper demand.
  • The weaker dollar, which eased against the euro to $1.3108 from $1.2979 late Tuesday, made dollar-denominated copper contracts more attractive to investors using foreign currencies.
  • China's booming manufacturing sector, which relies heavily on copper for electrical wiring and copper tubing, has helped the country become the world's largest copper consumer in recent years.
  • Analyst Stephen Platt of Archer Financial Services noted that the marginal changes in demand for copper will have the most impact from outside developed countries.

Statistics:

  • 93,000: The number of new private-sector jobs added in November, exceeding economists' expectations of a 70,000 gain.
  • 1.7%: The percentage increase in copper prices for the most actively traded contract, for March delivery.
  • $3.8900: The price of the most actively traded copper contract for March delivery.
  • 145 cents: The amount of copper prices rose overnight during the Asian trading session after China's official purchasing managers index rose to 55.2 in November from 54.7 in October.
  • 55.2: The official purchasing managers index reported by the China Federation of Logistics and Purchasing, indicating a strong manufacturing sector.

Sources:

  • Dow Jones Commodities News via Comtex, "Copper Rallies on Strong US Employment Data", December 01, 2010.
  • Automatic Data Processing Inc. (ADP) and Macroeconomic Advisers, "National Employment Report", November 2010.
  • Dow Jones, "Dollar Eases vs. Euro as ECB May Discuss Bond Purchases", December 02, 2010.

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