Copper Testing YTD Highs
Despite the ongoing uncertainty and risks around the US trade war, copper prices are attempting to push higher through the middle of the week as risk sentiment improves on increased Russia-Ukraine peace prospects. A heavily lower US Dollar is certainly feeding into bullish sentiment here as the greenback continues to fall amidst an uptick in near-term US rate-cut expectations. Copper prices are also being boosted this week by news of better demand in China with industry data pointing to continued inventory declines in Shanghai and Guandong. Demand from electric vehicle makers and grid infrastructure projects has been reported as rising recently, in an encouraging sign for copper bulls.
Tariff Impact
Trump’s tariff war remains a key threat to the copper market. However, given the lower global supply as a result of supply chain issues in Chile, the largest global copper producer, price are remaining firm for now. Indeed, some players suggest that tariffs might ultimately drive up the cost of copper by putting further pressure on supply chains at a time when supply is already flagging.
US Inflation on Watch
Looking ahead, copper prices look poised to continue higher while the current downtrend in USD remains. If the Dollar sees fresh selling on the back of a weaker US inflation reading today, this could well see the copper market breaking out to fresh YTD highs. However, if see a surprise upside print today, this could fuel some short-covering in USD, capping commodities prices for now.
Technical Views
Copper
For now, copper prices remain stalled around the 4.8010 level. This has been a key hurdle for bulls this year, twice capping a push higher. With momentum studies bullish, the focus is on a continued move north and if bulls can breach this level, the path if open for a continuation up to 5.12 next. Downside, 4.5785 remains key support to watch.
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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.