Copper Traders Eyeing A Downside Break?
The fear and uncertainty around the prospect of a global recession over the remainder of the year are well reflected in the recent price action we’ve seen in copper futures. Following the heavy sell off we saw over Q2, prices attempted a recovery across July but were rebuffed into a test of the 3.7300 area. From there, prices have since slipped back and are now trading in the middle of the 3.3445 – 3.7300 range.
Fears of a global recession are a major headwind for copper prices, in particular, fears of a slowdown in the largest global consumer of copper, China. However, the key for copper prices in the short term is the US Dollar. USD has been flip-flopping recently around traders’ oscillating Fed expectations. However, on the back of the August CPI report earlier this week, a fresh rally in USD put copper downside back in focus. Bears can look for a break of the 3.3445 level targeting a move down to 2.9610 near-term.
Keep An Eye On
Today’s US retail sales data is likely to be the next catalyst for a USD directional move, provided we see something of note. If the data comes in above expectations, we can expect USD to continue higher near-term, pressuring copper prices. Alternatively, if data undershoots forecasts this might see USD coming off a little, allowing copper prices to rally.
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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.