Copper Rallying

Copper prices have enjoyed a solid first week of trading in 2025 with the futures market currently boasting gains of almost 8%. Notably, the rally in copper prices this week comes amidst a fresh uptick in USD and against a backdrop of heightened uncertainty around expected Trump tariffs ahead of his inauguration later this month.

Better US Data

On the USD front, strong US data this week (ISM services & JOLTS jobs) have further strengthened hawkish Fed expectations on the back of the guidance given in December. Indeed, last night’s FOMC minutes confirmed the Fed’s outlook on slowing the pace of easing against current inflation risks and strong growth. With this in mind, traders now look to tomorrow’s headline NFP data. If we see further strength, Q1 rate cut pricing should fall further, leading USD higher near-term.

China Focus

However, given that copper prices have so far shunned the strength in USD, focus looks to be geared more towards expectations of fresh Chinese stimulus. Following the PBoC’s guidance last week that it will cut rates again at the appropriate time, traders are now expecting a fresh wave of measures. The bank’s confirmed shift to an easing stance last year has been seen as laying the groundwork for fresh and more sweeping support this year, aimed at boosting the economy. Such expectations are currently underpinning copper prices via an expected uptick in demand and should keep copper prices moving higher near-term.

Technical Views

Copper

The rally in copper has seen the market trading back up to test the 4.3090 level. With momentum studies turned bullish, focus is on a breakout above the level with the triangle highs the next resistance to note, ahead of structural resistance at the 4.5785 level above.