Copper settled down -1.43% at 398.80 dropped to a one-month low on Friday and was on track for its biggest weekly fall in nearly three months as an investigation into metal financing in China prompted speculation that a crackdown could hit trade in the metal. Last Friday, the US nonfarm payroll data for May were reported above expectation, rising 217,000 jobs, and the unemployment rate remained at its lowest since September 2008 of 6.3%. The rate has remained above 7% for seven months. The upbeat data indicated the country has emerged from the implications of frigid winter. The labor force participation rate remained at 62.8% in May. Standard & Poor’s affirmed its “AA+” rating on U.S. long-term unsolicited sovereign credit, saying its outlook on the long-term rating remained stable. LME copper, however, failed to gain traction from these optimistic data due to Qingdao port’s investigation into metal financing which was believed to impair China’s metal trades. LME three-month copper suffered sell-offs and tested a low of USD 6,640/mt before closing at USD 6,708/mt, down USD 74/mt. Also China will cut the reserve requirement ratio (RRR) further for some banks when appropriate, the bank regulator said, only a week after the government lowered the RRR for the second time in two months to bolster economic growth. Still, firms holding copper stocks in bonded warehouses in China sold more metal on fears that they would not be able to obtain inventory financing from banks, pushing down premiums near 50 percent. Technically market is under fresh selling and getting support at 395.3 and below same could see a test of 391.7 level, And resistance is now likely to be seen at 403.5, a move above could see prices testing 408.1.

Trading Ideas:

Copper trading range for the day is 391.7-408.1.

Copper dropped as an investigation into metal financing in China prompted speculation that a crackdown could hit trade in the metal.

Some copper cargoes held at China's Qingdao Port were being shipped to more regulated LME warehouses.

Limiting losses, U.S. employers kept up a solid pace of hiring in May, returning employment to its pre-recession level.