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China Data Weighs on Copper
Copper prices are trading tentatively higher today as the market continues a shallow recovery rally. A weaker US Dollar is helping drive support for the metal which is on the back of a more than 20% decline over recent months. Concerns over the health of the Chinese economy, and a subsequent downturn in the Chinese demand outlook, has been a major headwind for copper bulls this year. Following a strong start to the year, a slew of weak Chinese data saw sentiment fading with industrial data dropping sharply through Q2.
US Recession Fears
More recently, copper prices have come under additional pressure amidst an uptick in US recessionary fears. A weakening trend in US labour market data alongside a drop in PMI readings has seen traders ramping up their bets on a US recession in the coming quarters. However, with Fed easing expectations surging as a result, copper prices have managed to stabilise for now, underpinned by a weaker US Dollar. Looking ahead, incoming US data will be closely watched with nay fresh downside in USD likely to keep copper well bid for no. Today, US CPI will be the focus point for markets. Expected to remain unchanged at 3%, a surprise on either side of consensus should be firmly market moving for copper.
Technical Views
Copper
The sell off in copper has stalled for now into a test of the 3.9350 level. With momentum studies rising here, focus is on a continued recovery while 3.9350 holds, with the bear channel highs and the 4.3000 the main challenge for bulls. Above there, 4.5785 will be the initial target. To the downside, 3.6720 is the key support to watch.
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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.