Copper Breaks Out
Following a correction lower at the start of the week, copper prices have recovered and since broken out to fresh highs for the year. A reversal lower in USD has been a big driver of the rally in copper. The shift in sentiment this week comes amidst a perceived reduction in trade war risk following news that Trump won’t apply blanket reciprocal tariffs but will instead adopt a country-by-country approach with tariffs to be implemented after April following a review period. The news has been interpreted as bullish for risk sentiment with overall tariff levels likely to be lower and the potential for some countries to avoid tariffs given the negotiations now likely to take place ahead of April.
Bullish Outlook for Copper
For copper, the backdrop of diluted trade-war risks and a weaker US Dollar is a perfect storm for higher prices. The return of Chinese demand on the back of the Lunar New Year holiday is also helping lift prices. Looking ahead today, traders will be watching the latest set of US retail sales figures. For copper bulls, a weaker print today would be ideal, putting further pressure on USD ahead of the weekend. Traders will also be monitoring incoming news flow around potential Russia-Ukraine peace talks. The prospect of an end to the war there is a big boost for risk appetite and any fresh steps towards achieving a cessation in violence should further weaken USAD (reduced safe-haven demand while driving copper prices higher amidst improved risk sentiment.
Technical Views
Copper
The rally in copper has seen the market breaking out above the 4.5785 level, now trading up to test resistance at 4.8010. With momentum studies bullish, focus is on a continuation higher towards the 5.12 level next, while price holds above 4.5785.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.