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Damaged Charts Extend

COPPER

Even though weekly Shanghai copper warehouse stocks posted a moderate decline late last week, equities showing periodic strength and interest rates at times ticking lower, the copper market ranged down and violated a series of key chart support levels at the end of last week which extends last week’s pattern of damaged charts into a new week. In retrospect, economic news from China continues to be very discouraging, and this week could present a major macro-economic smack down of physical commodities from fear of a US government shutdown or worse a global financial crisis as US debt concerns flare. However, the trade was already beginning to lose its optimism regarding a near-term global economic turnaround and given the start of the monthly inflation report cycle, interest rates are likely to become more important to copper and other physical commodity markets this week. While exchange stocks of copper have supported prices from general outflows recently, the magnitude and inconsistency of those declines have not managed to offset sticky demand fear.

copper tubes

GOLD / SILVER

Overnight saw mixed markets with developed markets mainly up, and emerging markets mostly down. Japanese PPI data came in below expectations as prices continue to decelerate. Keeping with the theme of slowing manufacturing data, Japanese machine tool orders turned lower this month, dropping -20.6% from last year. The most worrying data came out of China. Although the new loans came in at CNY738 Bn, beating estimates, the 10.9% year over year change was near its lowest level in 22 years. European data started out with the worst UK home asking price data we have seen since 2009 with asking prices dropping by 1.3%. The North American session will only have one economic number of note, the New York Fed’s October reading on consumer inflation expectations which are expected to be roughly in-line with the September result.

 

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