Analyst are looking towards tonight’s China numbers as more evidence of a Chinese slowdown. But what is Dr. Copper whispering?

CopperCopper prices jumped to its highest level in nearly 2 weeks this morning as it approaches a 2% move on European trading. Could copper be suggesting China (FXI, quote) could see additional strengthening on the heels of continued stimulus?

In the early hours of Thursday (1:30am EDT) China will release key industrial production numbers for May as well as retail sales and fixed-asset investments for the month May.

Expectation is for these numbers to be flat to a slight tick higher. The all-important industrial production expectations are for 6.0% compare to the previous reading of 5.9%.

China’s economy grew the slowest in 6 years during the first quarter of 2015 despite the People's Bank of China efforts to stimulate the economy since November last year.

Looking at the FXI ETF we find the option market pricing in a strong bullish move in the ETF with 10% plus increase of volatility in the front month. Is China’s stimulus starting to pay off?

Bottom Line: I wouldn’t right off the second largest economy that consumes 40% of the world’s supply of copper.

 

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