FX:Copper rallies to 1-month high on U.S., China stimulus talk
Forexpros - Copper futures gained more than 1% to hit a one-month high during European morning hours on Thursday, as mounting hopes for near-term easing measures in the U.S. and China boosted the appeal of the industrial metal.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.496 a pound during European morning trade, rallying 1.2%.
Earlier in the day, prices rose by as much as 1.3% to trade at a session high of USD3.502 a pound, the highest since July 20.
Copper futures advanced Wednesday after minutes from the Federal Reserve’s most recent policy meeting showed that many members thought additional easing may be warranted "fairly soon" unless there was evidence of a "substantial and sustainable" strengthening in the economic recovery.
The greenback came under broad selling pressure following the news, with the dollar index, which tracks the performance of the U.S. dollar against a basket of six other major currencies, fell 0.3% to trade at 81.33, the lowest since May 22.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Prices found further support after disappointing Chinese manufacturing data released earlier added to hopes policymakers in Beijing will introduce fresh stimulus measures to boost growth in the world’s second largest economy.
Data released earlier in the day showed that China’s HSBC Flash Purchasing Managers Index fell to a nine-month low of 47.8 in August from a final reading of 49.3 in July, as new orders slumped in the face of weakening global demand.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, in the euro zone, preliminary data showed that manufacturing activity across the single currency bloc improved in August, although it remained in contraction territory for the 12th consecutive month.
Separately, manufacturing activity in Germany in August improved for the first time since January, but remained in contraction territory for the sixth consecutive month.
In France, manufacturing activity improved more-than-expected in August, although it remained in contraction territory for the fifth consecutive month.
Europe as a region is second after China in global demand for the industrial metal and worries over its economic growth have kept copper prices under pressure in recent weeks.
Elsewhere on the Comex, gold for October delivery rallied 1.5% to trade at a 16-week high of USD1,662.95 a troy ounce, while silver for September delivery surged 2.75% to trade at a three-and-a-half-month high of USD30.37 a troy ounce.
