Copper Prices Rise Amid Upbeat Economic Data and Weaker Dollar

Strategic Insights -

Copper futures surged on October 28, 2010, due to optimistic economic indicators and a softer dollar, but retreated from earlier highs as investors cashed in profits. The most actively traded contract, for December delivery, settled at $3.7875 per pound, up 0.3% or 1.2 cents from the previous day. Analysts attributed the rally to positive employment data and improving industrial demand, which pointed to market supply shortfalls next year.

Key Takeaways:

  • Copper prices rose 0.3% or 1.2 cents to $3.7875 per pound, settling up from earlier lows despite upbeat news.
  • Investors continued to book profits throughout the day, pushing copper prices down despite optimistic economic indicators.
  • Weaker equity markets added downward pressure on copper prices, as some traders sold copper futures to cover losses in other markets.
  • The weak dollar and positive employment data, which fell to 434,000 in the week ended October 23, contributed to the rally in copper prices.
  • Copper traders see positive employment data as an indicator of future economic growth and higher copper demand.
  • The most actively traded contract is down 2.1% from the 27-month high settlement of $3.8690 set on Tuesday.

Statistics:

  • Copper prices rose 0.3% or 1.2 cents to $3.7875 per pound.
  • Unemployment claims fell by 21,000 to 434,000 in the week ended October 23, the lowest level since July.
  • The Dow Jones Industrial Average was recently down 0.4% at 11,087.9.
  • Copper prices are up nearly 40% from July lows as improving industrial demand and constricted global supply pointed to market supply shortfalls next year.
  • Copper traders were also eyeing potential output disruption at Chile's biggest copper mine, Collahuasi, which produces around 500,000 metric tons of copper a year.

Sources:

  • Dow Jones Commodities News via Comtex
  • Comex division of the New York Mercantile Exchange
  • Archer Financial Services
  • LOGIC Advisors
  • LaSalle Futures in Chicago
  • Dow Jones Newswires
  • The New York Times
  • ICE Dollar Index
  • Federal Reserve