Copper rallies on weak dollar; Jobless claims data expected

Copper rallies on weak dollar; Jobless claims data expected

30 April 2015, 12:40
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On Thursday copper prices hit five-week highs, as the greenback plunged with a June rate hike now looking less likely. 

On the Comex division of the New York Mercantile Exchange, copper for July delivery touched an intraday peak of $2.834 a pound, the most since March 26, before trading at $2.833 during European morning hours, up 3.4 cents, or 1.21%.

Yesterday copper tacked on 1.2 cents, or 0.45%, to end at $2.799. Futures were likely to find support at $2.735, the low from April 27, and resistance at $2.868, the high from March 26.

The Federal Reserve kept interest rates on hold following the conclusion of its Federal Open Market Committee meeting on Wednesday, hardly providing hints on the timing of its first rate hike in nearly a decade.

The central bank said in its policy statement it will take into account labor market conditions, inflationary pressures and expectations of international financial developments when it decides on the timing of a rate increase.

The regulator removed all calendar references on a potential window for raising rates from its statement, adding to uncertainty over the timing of a Fed rate hike.

Moreover, data issued Wednesday indicated that the U.S. economy grew just 0.2% in the three months to March, falling sharply from 2.2% in the final quarter of 2014.

Investors were anticipating weekly data on initial jobless claims later in the day for further indications on the strength of the economy.

A recent run of disappointing U.S. economic data dampened optimism over the recovery, spurring speculation the Fed could delay hiking interest rates until late 2015, instead of tightening midyear.

Copper was further backed by speculation policymakers in China will have to introduce further stimulus measures to boost the economy amid lackluster growth.

The People's Bank of China has introduced a series of stimulus measures since November. Those include lowering interest rates twice and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.

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