Copper Breaks Out
Following a sharp move lower at the start of the week on news of Trump’s trade tariffs, copper prices have recovered and are now firmly rallying. The futures market has broken out to 4-month highs today, reflecting a shift in sentiment on trade war risks. Mexico and Canada both ultimately agreed to meet Trump’s border requests, in exchange for tariffs being postponed.
US/ China Trade Truce Hopes
Additionally, despite aggressive rhetoric initially, China opted for weaker counter measures against the US with Trump and Xi Jinping expected to negotiate on trade in an upcoming call with traders sensing that the two sides will ultimately agreed a deal to end the trade war. If seen, this will be firmly bullish for copper prices. On the other hand, if talks break down and we see a fresh escalation in the trade dispute, this should lead to a sharp reversal lower in copper.
US Jobs Data Due
Away from trade developments, traders will also be watching incoming US jobs data tomorrow. Softer data through the week, and fading trade war risks, have kept USD anchored lower this week, feeding into bullish price action in commodities. If we see further weakness in tomorrow’s headline data, this will be firmly bullish for copper prices into next week as USD sells off. Alternatively, any upside surprise in tomorrow’s data might see the copper rally capped for now as USD advances again.
Technical Views
Copper
The rebound off the triangle lows has seen the copper market breaking out above the triangle high, with price now breaking to fresh YTD highs above the prior high watermark set in January. With momentum studies bullish, focus is on a test of the 4.5785 level next with a break here seen as firmly bullish for the market.
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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.