China Manufacturing Declines
Copper prices have come under heavy selling pressure today with the futures market down more than 4% as of writing, and more than 6% lower on the week. The crash comes in response to weak data out of China overnight. The manufacturing PMI was seen falling back into negative territory at 49, down from 50.5 prior, below the 49.7 the market was looking for. The move is a disappointing shift following the move back inti positive territory over the prior month, which came on the back of several months of contraction. Indeed, with the US/China trade war still raging, traders are fearful over the growing impact on the Chinese economy and the implications for the crude market.
US Data on Watch
Looking ahead today, copper prices look vulnerable to further downside if expected weakness in US data is confirmed this afternoon. US Q1 GDP is expected to have fallen sharply to 0.2% from 2.4% prior. Indeed, with chatter around a potential negative number, fresh weakness in US data today should further the demand outlook in copper, keeping price skewed lower into Friday’s headline jobs data.
US/China Trade Developments
While copper prices are currently heavily sold, the bigger focus remains the US/China trade war. With that in mind, prices can recover just as quickly if we see any positive headlines regarding dialogue between the two sides. Indeed, any headlines showing that either side has begun stepping down tariffs, will be firmly bullish for copper near-term, as such there is plenty of volatility risk ahead.
Technical Views
Copper
The sell off in copper has seen the market breaking back below the 4.8010 level. Price is now testing back under the bull channel lows with 4.5785 the next support to watch. If we breach below this area, focus shifts to deeper support at the 4.30 level next, in line with weakening momentum studies readings.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.