Copper Sinks Amidst USD Rally & Weaker Demand Signals
Copper Heavily Sold
Copper prices are plunging today as a fresh move higher in USD hits demand expectations in the red metal. HG futures are down almost 3% on the day as the reversal from all time highs continues. Hawkish Fed expectations and renewed uncertainty around US/Iran peace talks have combined to spark a fresh wave of demand for USD this week with DXY breaking out to new highs for the year. Last week’s hawkish FOMC meeting saw market pricing for a Fed rate hike by year end jump to above 80% from below 60% prior to the meeting. With risks of a continuation higher in USD near-term, copper prices look vulnerable to continued corrective action from here.
Chinese Imports Fall
Alongside the upside push in USD, copper sentiment is also being hurt by the latest industry data which shows that Chinese imports have fallen again despite global copper shipments (available supply) rising monthly since April. Traditional copper-consuming industries in China have reported lower demand this year though this has been somewhat offset by a pickup in demand from renewable energy and electronic vehicle sectors.
US Data Up Next
Looking ahead this week, the latest US core PCE data on Thursday has the potential to drive further copper downside if USD rallies in response to nay data upside. Traders will also be watching Fed speakers throughout the week with any hawkish commentary likely to add downside weight for copper.
Technical Views
Copper
The sell off has seen copper prices pushing back below the bull trend line and 6.2845 level with price now close to testing the key 6.1090 support. If we break below here, focus turns to the deeper bear target below at 5.8550 in line with bearish 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.