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Copper Stays Rangebound
Following the slide from September highs, copper prices have stabilised over the last week with the futures market settling into a narrow and congested range atop the 4.30 level. A resurgence in the US Dollar this month has been a key headwind for copper prices with the market readjusting its Fed outlook in line with recent US data strength.
Fed Outlook
A surprise rebound in US labour market data last month saw traders scaling back near-term Fed easing expectations, leading USD higher and commodities prices lower. Near-term, risks of further USD strength are seen into next week’s upcoming US jobs report. If we see further strength, commodities look vulnerable to a fresh move lower as USD rallies into the November FOMC the following week.
US Elections Outlook
Along with the shift in Fed outlook, copper prices have also been weighed on by the return of the ‘Trump trade.’ The market is pricing in a greater likelihood of Trump winning the US elections, in line with recent polling shifts. As such, we’re seeing a return to the market dynamic prevalent during his presidency with USD rallying on expectations of protectionist polices and commodities suffering consequently. If we see a further shift towards Trump in the polls ahead of November 5th, this dynamic is likely to strengthen, weakening copper near-term.
Technical Views
Copper
The sell off in copper has seen the market trading back down to test support at the 4.30 level, which is holding for now. With momentum studies bearish, however, focus is on a fresh break lower and a test of the 3.9350 level next unless bulls can get back above 4.5785 near-term.
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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.