Copper Falls Midweek
Copper prices have come under fresh selling pressure today with the futures market pushing lower again. The move comes against the backdrop of a stronger US Dollar as traders continue to grapple with Fed easing expectations and a more uncertain outlook after Trump firing Fed’s Lisa Cook this week. Despite Powell signalling on Friday that the Fed is likely ready to ease rates in September, USD has failed to break lower, reflecting ongoing caution among traders.
US Data
The market will now be watching incoming US data closely with any upside surprises likely to dilute easing expectations, driving USD higher (copper lower). However, any data weakness should strengthen easing expectations, pushing USD down (copper higher) ahead of the September FOMC. This week, prelim US GDP and weekly jobless claims tomorrow, followed by core PCE on Friday, will be the key readings to follow.
Weak China Data
Away from the Fed and USD, copper is also under pressure today following news that Chinese industrial profits dropped again last month. The data reflects a trend of ongoing weakening amidst dilute consumer confidence and dampened business activity. With the US and China still locked in a trade war, the prospect of a further weakening of Chinese industrial activity is a key risk for copper prices given the negative implications of the copper demand outlook there.
Technical Views
Copper
The market remains capped by the 4.5785 level for now and is turning back down towards the 4.30 marker. This is a key support zone which, if broken opens the way for a deeper run down towards the 3.9350 level next.
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