Copper yesterday settled flat at 406.60 finding support amid tentative signs of rising demand with worries about liquidity in China diminishing, but the metal still closed the quarter with its biggest loss in almost two years. Stocks were pushed higher last Friday by encouraging Japanese economic data and signs that the US Fed will keep in place its monetary stimulus for the moment, which helped improve market sentiment. Commodity prices gained support from the PBOC's efforts to ease liquidity crunch in China's banking system. US shares were mixed, however, as investor attention was shifted to China's June manufacturing PMI due to the released on Monday. The US dollar index extended gains as it was reported that the Fed may begin to taper off debt-buying program in September, stalling any substantial uptick in copper prices. Fed official Jeremy Stein stated overnight that whether the Fed will quit QE3 will depend on long-term economic progress, rather than near-term economic data, but hinted the Fed will begin to take action in Sept at the earliest if US economy maintains mild recovery, causing expectations over QE end to grow. After the EU summit ended, the Fitch and S&P's downgraded Cyprus' credit rating to show negative effects of debt transposition and write-down by the country. But the two rating agencies pointed out that since the country's bond transposition plan underway has not caused substantial effects on the market, its rating will be raised once the bond transposition plan is completed. Technically market is getting support at 406.00 and below same could see a test of 405.50 level, And resistance is now likely to be seen at 407.10, a move above could see prices testing 407.70.

Trading Ideas:

Copper trading range for the day is 405.5-407.7.

Copper ended with small losses easing ahead of the release of major economic data from the top consumer of the industrial metal.

Commodity prices gained support from the PBOC's efforts to ease liquidity crunch in China's banking system.

Fitch and S&P's downgraded Cyprus' credit rating to show negative effects of debt transposition and write-down by the country.