US copper futures tested the upper end of their range early Friday morning as the dollar slipped after a double dose of softer US economic data raised chances of a Federal Reserve rate cut next week, brokers said.
By 10:27 am EDT (1427 GMT), copper for December delivery climbed 6.20 cents to $3.4585 a lb on the New York Mercantile Exchange's COMEX division, moving between $3.3650 and $3.4650. Despite concerns about a slowdown affecting the real economy, copper prices have held up relatively well, and looked set to test near-term resistance at $3.50. Traders cited stronger technicals after prices were able to hurdle the $3.43 level.
"We ran into some buy-stops above and look ready to challenge $3.50," one said. Futures volumes were estimated at 2,489 lots by 10 am. On Friday, the dollar was down, extending its recent string of losses against the euro. US retail sales rose 0.3 percent in August, lower than economists' forecasts for up 0.4 percent. But, they posted their biggest decline in almost a year when car sales were stripped out.
The euro traded 0.15 percent higher at $1.3888, from $1.3880 before the report. In a separate report, US industrial production rose by a smaller-than-expected 0.2 percent in August as both manufacturing and mining output fell.
Manufacturing output fell 0.3 percent in August - its first decline since February - after July's increase was revised upward to 0.7 percent from a previously reported 0.6 percent gain. Motor vehicle and parts production fell 2.6 percent in August after a 0.7 percent July rise, while machinery output fell 1.0 percent. The lacklustre data suggested the Federal Reserve will move to cut interest rates by at least a quarter percentage point when it meets next week.
Fundamentally, copper received additional support from overnight inventory data that suggested stronger demand growth for the industrial metal. Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 6 percent to 59,765 tonnes in the week ended Thursday, from 63,589 tonnes the previous week. LME copper for delivery in three months last traded at $7,560 a tonne, up $20 from Thursday's close.
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