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Copper Selling Pauses – For Now
The decline in copper futures looks to have paused for now with the market steadying around 4.40 per pound on Thursday. Investors are taking a moment to reconsider how China’s stimulus efforts might affect demand for base metals in the short term after the metal had been heavily sold from the recent 4.79 highs
China Stimulus
To boost capital markets, China’s central bank set up a swap facility worth 500 billion yuan for financial institutions, including securities firms and insurers, to help with stock purchases. Beijing had already rolled out a broad monetary stimulus package in response to some concerning economic data that raised doubts about hitting their 5% GDP growth target. However, the lack of new measures announced during an unexpected briefing from the economic planning agency this week made investors concerned about whether this support would actually boost demand for industrial metals like copper.
Fed Impact
Meanwhile, commodity markets faced some pressure as investors started to dial back their expectations for aggressive interest rate cuts from the Federal Reserve, especially after a strong jobs report in the U.S. Looking ahead today, focus will be on the latest US inflation data. If we see any surprise to the upside, this could revive selling copper as traders further scale back their easing bets. On the other hand, any downside surprise in today’s data will be welcomed by copper bulls, pulling USD lower.
Technical Views
Copper
The failure in copper ahead of the 4.84 level has seen the market reversing sharply lower. Price is now back under the 4.5785 level and close to testing support at 4.30. Bulls need to defend this level to prevent a deeper move to 3.9350 next.
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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.