Copper prices rebounded technically on Monday helped by a weaker dollar, but investors were eyeing key Chinese data this week, including import and CPI numbers due on Tuesday. The most-active July copper contract on the Shanghai Futures Exchange lifted 1.6 percent to 66,980 yuan at its close, tracking the rise on the LME and also boosted by a fall in the ShFE's stockpile to a 5-month low.
"The morning after the storm is always calm, and that's why we are seeing this technical rebound," said Pinaki Rath, managing director of Gold Matrix Resources said. "Yes, there were some bad economic data last week, but they were not dismal enough to warrant such a big reaction in base metals." A Shanghai-based trader agreed that copper was in a short-term technical rebound after prices went down so much last week.
"But I'm also keeping an eye on upcoming data in China, including tomorrow's import numbers, which will give us a sense of demand, and Wednesday's CPI number, which will give us a hint on whether there will be further tightening," he added. Last week's selloff was stemmed after the release of US nonfarm payrolls numbers, which showed that US companies created jobs at the fastest pace in five years in April, at 244,000 jobs, above economists' estimate of 186,000.
Also, European traders found more incentive to invest in dollar-denominated base metals after the euro firmed against the greenback following its steep drop last week. The euro bounced back in early Asian trade on Monday, but speculators' bloated long positions in the currency pointed to the risk of further falls.
The single currency's losses had accelerated on Friday after a report, later denied, that Greece was considering leaving the eurozone. Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell for the seventh week by 4.1 percent from a week ago, the exchange said on Friday, adding to signs of gradual improvements in demand.
Although copper stocks have fallen about 30 percent from the peak of 177,365 tonnes recorded in mid-March, industry watchers remain concerned about growing inventories at bonded warehouses.