This weeks pricing has largely been dominated by the strength of the AUD/USD exchange rate. Between Monday and Thursday last week the dollar jumped two cents from 1.082 to 1.103 which has a significant effect on the high priced items such as copper.
Overseas, the last few days have been again more mixed signals with initial optimism over the U.S. debt ceiling deal overshadowed by weak US Manufacturing data. Initially copper futures rose when U.S. Democratic and Republican party leaders reached an agreement late Sunday to increase the national borrowing limit and cut spending by about $2.4 trillion over 10 years.
However a few hours later, the ISM’s manufacturing purchasing managers index fell to 50.9 in July from 55.3 in June, the lowest reading since July 2009. The ISM manufacturers index is a measure of US Manufacturing activity with scores above or below 50 separates expansion and contraction in the sector.
METALS-Copper hits one-week low after U.S. manufacturing data
By Pratima Desai and Silvia Antonioli
LONDON, Aug 1 (Reuters) – Copper hit a one-week low on Monday as disappointing manufacturing data from the United States reinforced fears of weak demand growth from the world’s largest economy and as the dollar strengthened. Earlier, the metal used in power and construction rose to a four-month high of $9,905 a tonne on expectations that U.S. lawmakers were
likely to pass a deal to raise the country’s debt ceiling, avoiding a default, and cut about $2.4 trillion from the deficit over the next decade.
Benchmark copper on the London Metal Exchange ended at $9,650 a tonne from from $9,820 at the close on Friday. Earlier on Monday it touched $9,625 a tonne, its lowest since July 25.
The pace of growth in the U.S. manufacturing sector slowed more than expected in July, according to the Institute for Supply Management’s (ISM) index, which showed it fell to 50.9 from 55.3 in June. The consensus was for a figure of 54.9.
“The market did react in a swift knee-jerk reaction to the yet again extremely weak U.S. data,” said Eugen Weinberg, commodities analyst at Commerzbank, adding that the stronger dollar was also behind losses in industrial metals.
“However the market seems to be weiging the chances of (further U.S.
monetary easing) and the positive outcome of the expansive monetary policy on the metals.”
Much of the money pumped into financial system has found its way into copper and other commodities, pushing up prices.