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Copper Prices Surge on Better-Than-Expected Jobless Claims and Weaker Dollar

Strategic Insights

— 1 min read

Copper futures traded higher on the New York Mercantile Exchange, with the December delivery contract rising 1% or 3.95 cents to $3.8150 per pound, as better-than-expected jobless claims and a weaker dollar boosted prices. The unexpected drop in unemployment claims, which fell by 21,000 to 434,000 in the week ended October 23, the lowest level since July, according to the Labor Department, sent a positive signal to copper traders. Economists had expected the claims to rise by 3,000, making the actual decline all the more surprising. Matthew Zeman, head of trading at LaSalle Futures in Chicago, attributed the copper price rally to the positive employment data, stating that it indicates future economic growth and higher copper demand.

Key Takeaways:

  • Copper futures rose 1% or 3.95 cents to $3.8150 per pound on the Comex division of the New York Mercantile Exchange, driven by better-than-expected jobless claims and a weaker dollar.
  • Unemployment claims unexpectedly fell by 21,000 to 434,000 in the week ended October 23, with economists predicting a rise of 3,000.
  • Copper traders view positive employment data as a step in the right direction, indicating future economic growth and higher copper demand.
  • Matthew Zeman, head of trading at LaSalle Futures in Chicago, stated that copper prices will be based on a healthy economy, citing the metal's widespread use in construction and manufacturing.
  • The dollar's weakness against the euro, amid worries about long-term inflation, also contributed to the copper price surge.
  • Investors sought safe harbor in copper futures and other commodity contracts as a hedge against inflation.

Statistics:

  • Copper futures rose by 3.95 cents to $3.8150 per pound.
  • Unemployment claims fell by 21,000 to 434,000 in the week ended October 23.
  • Economists predicted a rise of 3,000 in unemployment claims.
  • The dollar weakened against the euro, from $1.3764 to $1.3895.
  • Copper prices are influenced by the health of the economy, with positive employment data boosting demand.

Sources:

  • Dow Jones Commodities News via Comtex, October 28, 2010.
  • Labor Department, October 23, 2010.
  • LaSalle Futures, Chicago.
  • Dow Jones Newswires, Tatyana Shumsky, 212-416-3095, tatyana.shumsky@dowjones.com.

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