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The first trading day of each month usually delivers a worldwide rash of national manufacturing surveys. These purchasing managers’ indices can determine short-term direction for growth-sensitive assets; so watch the Australian and Canadian dollars, and industrial commodities.
In particular, China’s PMI may impact the copper price. The mood around the red metal’s fundamentals is somewhat sour right now.
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Many analysts and miners say they expect supply to outstrip demand in 2014 as new projects start ramping up production.
Stocks of copper are already quite high. Inventories at the London Metal Exchange, for example, are up almost 50 per cent this year, according to Bloomberg.
In addition, the prospect of the Federal Reserve eventually trimming its quantitative easing programme may bolster the greenback, the strength of which may likely weigh on dollar-denominated resources.
And yet for all that, the copper chart looks quite promising for bulls. The price is again approaching resistance around the $3.35 a pound level and this is coinciding with the 200-day moving average of about $3.33.
The tightening triangular range since the start of August necessitates a break out. But which way?
