Copper exchange traded funds rallied 5% on Wednesday after the Federal Reserve teamed up with other central banks to announce measures designed to ease funding pressures in the global banking system.
Copper prices rose more than 5%, hitting a two-week high Wednesday.
The iPath Dow Jones-UBS Copper ETN (NYSEArca: JJC) blasted above its 50-day exponential moving average. The financial product is structured as an exchange traded note and is designed to track copper futures contracts.
“Concerns regarding the Eurozone over the last several weeks had kind of acted as a resistance level above the market. Lifting this fear is allowing copper to move higher,” Dave Meger, head of metals trading at Vision Financial, said in a WSJ.com report.
Additionally, base metals were rising earlier on the Chinese central bank’s decision to reduce the reserve requirement ratio for its banks.
“This is a very significant development. It represents the beginnings of a move towards easier money in China where there had been a tightening of monetary conditions since early 2010,” Nic Brown, analyst at Natixis, said in a Reuters article. “We are absolutely not out of the woods yet but if you’re looking for the necessary pre-conditions for improvements in base metals prices in the months, this is top of the list.”
Higher private sector job numbers also helped boost copper prices. According to the payrolls firm ADP, private businesses added a net 206,000 jobs in November, AFP reports.
iPath Dow Jones-UBS Copper ETN
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Max Chen contributed to this article?