Copper Price extend Friday’s recovery on softer USD, China’s efforts to tame housing woes
- Copper Price grinds higher while keeping the previous day’s bounce off November 2020 lows.
- China takes measures to avoid potential crisis in real estate market.
- US dollar bears the burden of mixed US data, receding hawkish Fed bets.
Copper traces upbeat industrial metals while posting the second daily gains at around $3.30, as per the most active COMEX Futures, amid the early Monday morning in Europe. In doing so, the red metal cheers optimism among Chinese real housing markets, as well as benefits from the softer US dollar, amid a sluggish Asian session.
“Chinese regulators encouraged lenders to extend loans to qualified real estate projects to ease risks from a widening mortgage-payment boycott on unfinished houses, which helped property and bank stocks recover some recent losses,” said Reuters.
Also concerning China news, which helped copper buyers, was from People’s Bank of China’s (PBOC) Governor Yi Gang. “China's economy is facing downward pressure due to COVID-19 and external shocks, and the central bank will "increase implementation of prudent monetary policy" to support the real economy,” per Reuters. The news also quotes a commentary that appeared in China’s state-owned Securities Times while mentioning, “China's monetary policy has ample room and sufficient tools, including further cutting banks' reserve requirements, to cope with new challenges amid a shaky economic recovery.” It’s worth noting that Xinhua quotes Chinese Vice Premier Liu He as urging stronger steps be taken to boost employment.
The news also mentioned that the three-month copper on the London Metal Exchange (LME) rose 1.7% to $7,131.50 a tonne by 04:01 GMT. Further, the most-traded August copper contract on the Shanghai Futures Exchange (SFE) advanced 2.6% to 56,040 yuan ($8,306.41) a tonne by the press time.
That said, the US Dollar Index (DXY) drops for the second consecutive day while extending Friday’s pullback from nearly a two-decade high. In doing so, the greenback’s gauge versus the six major currencies justifies recently easing hawkish bias over the Fed’s next moves, especially after the previous day’s mixed US data and cautious Fedspeak. Additionally weighing on the DXY is the Fed policymakers’ silence period ahead of late July’s Federal Open Market Committee (FOMC).
Reuters also came out with the news saying, “Global miner BHP Billiton is likely to reconsider its investment plans in top copper producer Chile if the government moves ahead with mining tax hikes, according to a report on Sunday.” The news could weigh on the metal prices on matching reality.
On a different page, a light calendar could keep the US dollar pressured while receding hawkish Fed bets may also help the copper price to stay in the recovery mode. Though, the PBOC Interest Rate Decision, up for Wednesday, could also entertain copper traders.