The copper market managed a fresh upside breakout this morning. This comes after a series of daily gains early in the week. Unlike the gains in gold, silver and platinum likely being short covering, the gains in copper could be short covering combined with outright fresh buying. Clearly copper was at least partially oversold with positioning in the last COT report registering a net short in excess of 23,000 contracts. Furthermore, copper prices are rising in the face of a 2,358 ton rise in weekly Shanghai copper stocks overnight but that action was probably made possible by the surprise EU move to lower borrowing costs for Italy and Spain. The big question for the trade today will be the reaction in prices to potentially soft US data. Copper has seen recently its share of weak forward demand predictions and seeing more evidence of weakness in the US economy could serve to diffuse the initial upward bias on the charts. However, there is the potential for the copper trade to spin weak US data into an increased chance of US easing. With the market already carving out one of the biggest daily gains in over two months, it would seem like the bull camp has a large portion of the bear camp already rocked back on its heels and that might suggests the trade might have the capacity to spin weak US data into a positive later this morning. LME copper stocks overnight were up +1,050 tons to stand at 257,150 tons.
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