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The red metal had a good start to the week, with dealers bargain-hunting after last week’s decline, and also because China posted stronger-than-expected manufacturing purchasing managers index (PMI) numbers over the weekend. The HSBC Chinese manufacturing report has confirmed that the sector grew in August, so today traders are selling copper to lock in their profits from the rally that began the week.
Chinese manufacturing may have been strong in August, but it has been in decline over the past 12 months, and so has the price of copper. China is the largest importer of the metal, and commodity traders have taken their cues from the Asian powerhouse over the past few years.
Dealers are now keeping an eye on the Federal Reserve. The Fed’s bond-buying programme is currently worth $85 billion per month, and it will look to reduce that figure between now and the end of the year. This could strengthen the US dollar, which may in turn have a negative impact on copper. Tonight, the US Beige Book is released at 7pm. If it is positive, it could push copper lower by triggering fears of tapering.