Morning Futures Roundup

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Is the Rally in Copper Pointing to Improving Global Economic Conditions?

 Fundamentals

Bullish traders have taken a liking to the Copper market lately, as prices in the lead month September futures have reached highs not seen since the middle of May. The Copper market has a reputation for being a leading indicator as to the strength or weakness of the global economy. Better than expected 2nd qtr GDP figures out of the U.K. as well as business confidence reading out of Germany gave further support to Copper in early trade on Friday. However, traders fixated on the results of the European Union's bank stress tests released late Friday morning.

                                       


The results of the stress test showed that only 7 out of the 91 banks tested failed, with the majority of the banks located in Spain. In addition, one German and one Greek bank also failed the test. The results were about what most traders were expecting, allowing Copper to maintain its early gains. The red metal also received some support from steel futures, traded at the London Metal Exchange (LME), which reached 10-week highs as iron ore imports to China rose. The most recent Commitment of Traders report shows large non-commercial traders nearly doubling their net-long position in Copper futures as of July 13th, and this was before the recent price rise. It is believed that these large speculators may have increased their net-long position during the past several sessions. Further upward momentum may come from technical traders, as prices are hovering right around the 200-day moving average, which longer-term traders tend to watch as a determinant as to whether a market is in a bullish or bearish mode.




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