Copper Gains As Strikes In Chile Mine Begins

Copper prices tested 18 month highs in MCX on Monday facilitated by positive triggers from Chile and participation of long positions. MCX Copper gained more than 1% during the day to test a high of Rs 349 per kg and ended at Rs 347.35 per kg up Rs 3. Copper stocks rose on Monday by 75 tonnes to 502400 tonnes.

Workers at Chile`s Chuquicamata, the world`s second biggest copper complex, began a strike over pay early on Monday, a union leader said, hitting output from global No. 1 producer Codelco. Codelco sources have estimated the Chuquicamata complex in far northern Chile, which includes the Chuquicamata and Mina Sur deposits and produces around 4 percent of the world`s mined copper, will lose up to 1,800 tonnes of copper output per day and cost the state around $8 million per day in lost revenue. Chuquicamata was expected to produce 565,000 tonnes of copper in 2009.

Source : Capital Market

Technical Breakouts In Lead Ignore Movements Of Dollar

Dollar movements against the EURO have been completely ignored by Lead during its intra day moves. There has been a technical breakout in Lead which has helped the contract to move up by more than 1%. MCX Lead benchmark contract is trading at Rs 114.75 per kg up Rs 1.35. The contract is expected to test 116 levels if the trend continues.

Meanwhile Dollar is trading at 1.417 up 10 pips. The greenback tested a high of 1.4254 and a low of 1.4348 against the EURO.

Prices movements have also brushed aside LME inventories data which has seen substantial rise. The inventories are now at 146500 tonnes up 6% from 138450 tonnes on 1st Dec 2009.

Source : Capital Market

Oil Bursts Above $80 A Barrel On Data Optimism

Crude oil bursts above $80 a barrel today as the strong China PMI data fueled optimism that demand for energies will improve in 2010. The strength in dollar is capping the rally in the dollar denominated assets.

China`s PMI rose to 56.6, the biggest increase in 20 months, in December from 55.2 a month ago.

Oil`s advance for the 8 day is also due to the abnormally cold weather in the US as it will likely increase demand for energy, particularly heating oil and natural gas.

MCX crude oil futures are trading pale following the sharp rally in Indian Rupee. The Indian rupee today gained 7 paise against the US currency in early trade on increased capital inflows into stock markets in line with firming global cues. MCX January oil is down Rs 6 at Rs 3721 per barrel.

The US will release manufacturing ISM, FOMC minutes and December employment report this week. ISM manufacturing probably improved to 54 in December from 53.6 a month ago. A better-than-expected reading should lift the dollar as it raises the chance for an early Fed rate hike. Currently, the market has factored in a 60% chance that the Fed will hike its policy rate by at least 25 bps by June. Moreover, pay attention to ISM components such as `new orders` and `imports` as there are signs that these indices are leading indicators for distillate demand.

However, the most important event for the week should be the employment rate to be released Friday. Improvement in jobless claims in 4Q09 signaled recovery in the job market. Analysts anticipate the number of non-farm payrolls stopped declining while the unemployment rate stayed flat in December.

Source : Capital Market