Copper Sold on China News
Copper prices are seeing heavy selling pressure on Tuesday as traders digest the latest briefing from the Chinese National Developments and Reform Commission. Traders had been eyeing fresh stimulus measures to be announced. However, with no additional program outlined at this time, copper traders reacted with clear disappointment, fuelling a more than 2% drop, as of writing. The futures market is now down around 7% from last week’s highs with price looking vulnerable to further losses near-term.
Hawkish Fed Shift
Alongside developments in China, copper prices are also softening as a result of a less dovish Fed outlook. An unexpected jump in the NFP last week has seen traders pulling back their expectations for a larger .5% cut from the Fed next week. Instead traders now eye a .25% cut as the base case scenario with a small chance of a hold.
US Inflation Due
Looking ahead this week traders will be watching the FOMC minutes along with US CPI and PPI. If we see any fresh USD upside in response to the data, copper prices look likely to remain sold through the week. The headline focus will be on Thursday’s CPI print with copper bulls hoping for a downside surprise to help stem USD upside and create some support for copper.
Technical Views
Copper
The rally in copper has stalled for now ahead of the 4.8400 level with price seen reversing back below the 4.5785 level. While below here, focus is on a test of the 4.3000 level next with bulls needing to defend the level to prevent a deeper move lower, in line with falling momentum studies readings.
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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.