Copper yesterday traded up 0.78% at 400.5 drawing strength from a weaker dollar and hopes that demand for the metal would rebound in the coming months. After downbeat economic data was released, Goldman Sachs lowered its forecast for US GDP growth for the second quarter to 2.0%. These discouraging figures rekindled expectations for the US Fed to delay exit of easing policy. US economic indicators announced last night disappointed markets. The Consumer Price Index dropped 0.4% MoM on a seasonally adjusted basis in April. The Philly Fed manufacturing index swung unexpectedly into negative territory (-5.2) in May. Housing starts in April fell 16.5% to 853,000 units, below expectations. Building permits rose more than expected by 14.3%. Initial jobless claims jumped to 360,000 in the week ended May 11, higher than forecasts. However, an US official said the Fed may begin to curtail asset buying from this summer at earliest, driving a slight retreat in US stocks and US dollar index. The euro zone’s trade surplus rose more than expected to EUR 18.7 billion in March, with exports pointing to growth for a third straight month. After the breakdown, exports in March climbed to 2.8% from February’s 0.2%. Imports, in contrast, slipped 1% MoM. This is a sign that the euro zone has begun to recover from recession. Technically market is under long liquidation as market has witnessed drop in open interest by -0.86% to settle at 25377 while prices up 3.1 rupee, now Copper is getting support at 395.1 and below same could see a test of 389.7 level, And resistance is now likely to be seen at 403.85, a move above could see prices testing 407.2.

Trading Ideas:

Copper trading range for the day is 389.7-407.3.

Copper gained drawing strength from a weaker dollar and hopes that demand for the metal would rebound in the coming months.

Europe as a region is third in global demand for industrial metal and worries over its economic growth have kept prices under pressure.

Meanwhile, in the U.S., data showed that industrial production fell by 0.5% in April, more than forecasts for a 0.2% drop.