Trade News Impact
Copper prices are starting to push higher again amidst a shift in market sentiment linked to recent developments in the global trade landscape. The recent deal between the US and China establishing a 90-day window of tariff reductions has raised market expectations that a proper trade agreement can be agreed in coming months. This has significant upside implications for the copper demand outlook. Part of this is linked to the better economic prospects for both the US and China if the trade war can be halted. Both economies were forecast to suffer as a result of the trade war, dampening copper demand expectations. However, if negotiations progress and it looks like a full trade deal can be agreed, this should alleviate these risks with copper prices poised to appreciate accordingly.
Weak USD Helping Copper
Copper prices are also being supported this week by a reversal lower in USD. Following initial strength in response to news of the tariff reductions between the US and China, USD has fallen lower midweek after soft US inflation data. Headline annualised CPI was seen cooling to 2.3% from 2.4% last month. The move has softened fears over an expected inflationary spike linked to the US trade war. Indeed, with the prospect of an end to the US/China trade war, the outlook for the USD has changed with the Dollar vulnerable to a further push lower if inflation continues to cool, lifting near-term Fed easing expectations. Against this backdrop, copper prices have room to rally provided US/China headlines stay supportive.
Technical Views
Copper
For now, copper prices remain hemmed in between support at the 5.4785 level and resistance at the 4.8010 level. Momentum studies have flattened out, reflecting the last of direction. While 4.5785 holds as support, the outlook remains in favour of a fresh push higher with 5.1985 the next bull objective if price does rally from here.
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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.