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Copper climbs ahead of Chinese data

Copper is edging higher as traders await both the official and HSBC manufacturing reports from China tonight.

Copper pipes
Source: Bloomberg

Copper is trading at 317 cents per pound and is currently sitting on the 200-day moving average, as traders expect both reports to show that manufacturing in China is in expansion territory.

The flash HSBC reading jumped to a seven-month high last week and analysts are expecting no change between the flash and final reading. Lately, official manufacturing surveys conducted by Beijing have been in expansion territory, but traders typically put a greater emphasis on the HSBC survey.

As I mentioned previously, the Chinese authorities have reduced the amount of capital banks are required in relation to their loan book, and it would appear that this policy has stimulated activity.

It is a positive sign that copper is now just above the 200-DMA. The red metal has encountered resistance at 319 cents per pound in the past, and if the results disappoint traders copper could drift back to 314 cents per pound. 

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