Copper slides before Chinese PMI

The price of copper is off for a third day in a row ahead of tomorrow’s Chinese manufacturing purchasing manager’s index (PMI) report.

Overnight HSBC will announce the Chinese manufacturing PMI report. The July reading came in at 47.7 and analysts are expecting a reading of 48.3 for August.

The decline in copper is linked to the decline in Chinese manufacturing, as the Asian powerhouse accounts for 40% of the world’s copper imports. The level of manufacturing in China is at an 11-month low and if it drops again we could see the price of copper drift lower.

There is speculation that Beijing may introduce a stimulus package in order to boost economic output. If such a package is announced we could traders buy back into the red metal.

Since copper is traded in US dollars, the value of the dollar can have an impact on the price of the metal. At 7pm (London time) the US Federal Reserve will release the minutes from its latest meeting; if the stimulus policy is going to be tapered we could see copper drop as the US dollar may rally.

High grade copper chart

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