You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
JULY <strong>2016</strong><br />
COMMODITY MONTHLY ROUND UP<br />
““The best argument against democracy is a five minute conversation with the average voter””<br />
- Winston Churchill<br />
Copper<br />
BREXIT: this single word is the momentous not only for<br />
the financial market, but can be remembered as one of<br />
the historical even after World War II. Another trickiest<br />
part of this beings, everybody miscalculated the event<br />
risk which really turned out to be Nassim Taleb’s real<br />
Black Swan Event. Other attributes of the event are, free<br />
fall of the British Pound, political chaos in the United<br />
Kingdom and last but not the least, the risk of spilling<br />
over from referendums in other member states of the<br />
European Union. A Legacy of more than 50 years is now<br />
over for the UK and for EU. Some experts are saying that<br />
the event is not as worse as Lehman Collapse for<br />
financial market but one should remember that London is<br />
the financial capital fof Europe and also for the world so<br />
certainly this political risk will have some long lasting<br />
effect on the markets. The contagion risk will be<br />
heightened if other nations of UK demand full fledged<br />
separation. Other than the BREXIT, market is also tensed<br />
with poll result from Spain where general election is<br />
going to be held after inconclusive result from last<br />
December poll.<br />
Generally copper is treated as a thermometer to measure<br />
the condition of the world economy and after BREXIT it’s<br />
really worth watching. Chile, the largest producer of copper<br />
said that plunging Pound isn’t going to dampen copper<br />
price, but it’s really hard to believe at least for the short<br />
term, it has to weather the wound. The London Metal<br />
Exchange’s three-month copper contract was down 3.2%<br />
at $4,627 a metric ton in early morning European trade on<br />
the result day and for the whole session wedged there.<br />
Ultimately the price is quoted in US Dollar, and if US<br />
Dollar appreciates then there is a high chance of lower<br />
prices for copper. So the challenge for copper is its own<br />
US Dollar sensitiveness. From the supply or demand side<br />
copper has no relation with BREXIT, but for demand side, it<br />
depends on China and from supply side it’s Chile which is<br />
not a part of the EU.<br />
Technical Analysis<br />
If we look at the monthly chart of COMEX active copper,<br />
it’s showing market presently near at 76% retracement<br />
level. We have drawn the Fibonacci levels from the top of<br />
$4.695 scored on 2011 to the base at 2008 low of $1.25.<br />
The market is in sideways as per the monthly chart for the<br />
last 6 months between $2.00 to $2.25. There is a chance<br />
that ongoing bearish development may take copper bit on<br />
the lower side around $1.80-$1.75 level but that may be<br />
the base for the market. All the monthly oscillator readings<br />
Weekly Chart : Copper COMEX Continuous<br />
50
Change language