Copper Under Pressure
Copper prices are continuing to push lower on Wednesday as traders brace for the latest set of US inflation data. The US Dollar has been on a tear since the US elections as anticipation ahead of Trump’s return to office next year driving the Dollar higher. Protectionist trade policies and growth-focused economic policy (tax cuts and higher spending) are widely expected to drive US inflation higher next year, pushing USD higher also.
Weaker China Demand
Against this backdrop, copper prices and the broader commodity complex has been softening. With USD pushing higher at the same time that demand forecasts in China are weakening, copper prices look vulnerable to further downside near-term. Traders have been disappointed by the scope and impact of recent Chinese stimulus measures recently which has failed to revive demand. Now on the brink of a new Trump administration, demand forecasts have been hit further.
Bearish Copper Risks
Today, if we see a fresh uptick in US inflation, particularly if the figures come in above forecast, USD looks set to rally further, pushing copper prices down deeper. With Fed easing expectations likely to be further diluted in the event of a fresh uptick in inflation today, there is little to offer hopes for a rebound in the near-term unless we hear some firm pushback from Fed’s Powell tomorrow.
Technical Views
Copper
The sell off in copper prices has seen the market reversing sharply lower with the market now trading below the 4.30 support which had underpinned price action since September. While below here, and with momentum studies bearish, focus is on a test of the 3.9350 level 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.