Copper prices remain under pressure today following a sharp reversal lower yesterday from the week’s highs. The reversal comes amidst an uptick in USD on the back of some better-than-forecast US data yesterday. Prelim quarterly GDP was seen rising to 6.4% from the prior and expected 6.2% reading along with an uptick in the headline durable goods number also. Rate hike expectations for September are currently around the 35% level but there is plenty of uncertainty given the 3 dissenting vote sin favour of a hike at the July FOMC. With that in mind, USD has started to grind higher again this week capping the rise in commodities prices for now.

Demand Rising Ahead of Potential US Tariffs

Ahead of yesterday’s reversal, copper prices had been pushing firmly higher as demand continues to grow in fear of potential copper tariffs which might soon come into play. Copper inventories at LME warehouses in London have fallen by almost 50% since early Q2. Along with frontrunning ahead of potential US tariffs, demand in China has also risen as a result of issues being faced by domestic smelters fuelling the need for imports. These spikes in demand are taking place against a backdrop of plunging global output led by heavily weaker supply levels from lead global producer Chile which has faced a number of issues this year.

Technical Views

Copper

For now, the rally in copper has stalled once again into the 6.7190 level with price now back below the 6.5830 level. The rising trend line from the YTD lows will be the next support to watch ahead of deeper structural support at the 6.2845 level.

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Tagged in: #copper #fed #dollar

Written by James Harte

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.