Copper futures fluctuate with U.S. dollar, jobs data in focus

Investing.com - Copper prices swung between small gains and losses on Thursday, as traders monitored the direction of the dollar while awaiting key U.S. employment data for further clues on the timing of a Federal Reserve rate hike.

On the Comex division of the New York Mercantile Exchange, copper for July delivery shed 0.2 cents, or 0.07%, to trade at $2.924 a pound during European morning hours. Futures held in a range between $2.905 and $2.934.

A day earlier, copper dipped 0.9 cents, or 0.31%, to close at $2.926. On Tuesday, futures rallied to $2.956, the highest level since November 28.

Futures were likely to find support at $2.892, the low from May 4, and resistance at $2.956, the high from May 5.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 94.20, not far from the two-month trough of 93.96 set on Wednesday.

The greenback remained under pressure after payroll processing firm ADP said on Wednesday that U.S. non-farm private employment rose by 169,000 last month, below expectations for an increase of 200,000.

The downbeat data fuelled fears that the government employment report, due out on Friday, would also fall short of forecasts. The report was expected to show a gain of 224,000 jobs in April, following an increase of just 126,000 in March.

A strong U.S. nonfarm payrolls report was likely to bring forward expectations on when the Federal Reserve will begin to raise rates, while a weak number could weigh on the dollar by undermining the argument for an early rate increase.

Recent economic reports have indicated that the economy has slowed since the start of the year prompting many investors to push back expectations on the timing of an initial rate hike by the Fed.

Prices of the red metal have been well-supported in recent weeks amid mounting speculation policymakers in China will have to introduce further stimulus measures to jumpstart the economy amid lackluster growth.

Since November, the People's Bank of China has introduced a series of stimulus measures, including lowering interest rates twice and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost growth.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.

Elsewhere, gold futures for June delivery slumped $8.40, or 0.71%, to trade at $1,181.90 a troy ounce, while silver futures for July delivery slumped 21.8 cents, or 1.32% to trade at $16.28 an ounce.

A drop in global government bond prices weighed on gold. Germany's 10-Year bond yield hit a fresh 2015 high of 0.673% early on Thursday, while the 10-Year U.S. Treasury yield traded near a two-month high.

Higher bond yields dampen gold's appeal as the precious metal does not pay any interest.

Euro zone and U.S. bond yields have been rising in recent sessions as deflation fears have eased amid recovering oil prices and following the introduction of the European Central Bank's massive quantitative easing program.