/Base metal trade sideways amid China concerns

Base metal trade sideways amid China concerns

By Manoj Kumar Jain

Base metals traded sideways last week due to demand concern from China and strength in Dollar against basket of currencies.

Prices of all industrial metals are under pressure after downgrading rating of China by international rating agency Moody’s last week. Moody’s downgraded rating of China from Aa3 to A1, emphasises a lack of confidence in the Chinese Government’s ability to reign in current debt levels.

China’s currency debt mounted to 300 percent of country’s GDP and which is the main cause of concern for global metal market. On the other side US federal reserve in it’s minutes given indication for further interest rate hike in the month of June. Last weeks US home sales numbers are also not favored base metal prices US new home sales for the month of April is fell by 11.4 percent to 5,69,000 as compared to 5.8 percent growth reported in previous month.

Base metals are also under pressure after announcement of budget proposals by US President Donald Trump. Strong dollar index other basket of currencies also dented early gains of all base metals in international market last week. Base metals on MCX division traded sideways last week. Copper June contract settled at 367.40, from the weekly high of 373.60.

Daily Price Chart of Copper (Source: Investing.com)

Technical View
Copper is trading sideways in international as well as domestic market. It has strong resistance around 374 levels while having support around 362 levels. Looking to the weak fundamentals and recovery in Dollar index we expect copper would trade sideways to negative this week. Trader are having opportunity to sell Copper around 370 levels with stop loss around 374 for down side target of 362. If it’s unable to sustain around 362 levels then we expect more downside till 358-354 levels.

Recommendation: Sell Copper around 370 SL 374 Target 362-358.

(Manoj Kumar Jain is Director of Commodity and Currency at IndiaNivesh Commodities. He has 20 years of experience in financial service sector. Views expressed in this article are author’s own and do not represent those of ETMarkets.com. Readers are advised to consult their financial advisers before taking any position based on these observations)

Let’s block ads! (Why?)

Markets-The Economic Times