FX:Copper extends gains after Spanish bond auction, ECB ahead
Forexpros - Copper futures were higher during European morning hours on Thursday, as market sentiment improved after Spain saw borrowing costs fall at an auction of short- and medium-term bonds ahead of a policy decision by the European Central Bank.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.801 a pound during European morning trade, gaining 0.45%.
Earlier in the day, prices rose by as much as 0.6% to hit a session high of USD3.807 a pound. Copper futures hit a two-week high of USD3.822 a pound on October 2.
Earlier Thursday, Spain sold EUR3.99 billion worth of government debt, in line with expectations.
The country auctioned EUR710 million of five-year debt at an average yield of 4.766%, down sharply from 6.456% at a similar auction last month. The bid-to-cover ratio stood at 2.5, compared to 2.06 at a previous auction.
Market sentiment continued to be underpinned by speculation that Spain will soon request a bailout and trigger a bond buying program by the ECB, which investors hope will ease the debt crisis in the region.
Traders now shifted their focus to the ECB’s policy-setting meeting later in the day. The announcement was to be followed by a press conference with bank head Mario Draghi, which will be closely watched for details of the bank’s bond purchasing program.
Copper traders also looked ahead to Friday’s key U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market. The Federal Reserve said last month it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves.
Minutes from that September Fed meeting will be released later in the day.
Weakness in the U.S. dollar also lent support, with the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, declined 0.3% to hit 79.83.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Elsewhere on the Comex, gold for December delivery added 0.65% to trade at USD1,791.15 a troy ounce, while silver for December delivery climbed 0.9% to trade at USD35.00 a troy ounce.
