Is Copper At Risk of Major Sell-Off?
Copper Holding Support For Now
Copper prices are back in the green today with the futures market benefiting from some early USD weakness on Monday. The market had dropped sharply again last week, hampered by a fresh push higher in USD. Looking ahead this week, with plenty of bullish risks for the greenback, copper prices are seen at risk of a fresh plunge lower. The Iran war shows no signs of slowing and with a ceasefire currently well off the table, USD safe-haven demand should reman a key theme, keeping commodities prices pressured lower.
FOMC & USD
Looking ahead this week, traders will be watching the Fed on Wednesday to learn how the bank assesses the current environment and how this is likely to impact rates policy near-term. Risks are skewed towards a more hawkish message from the bank, warning of the inflationary threat from higher oil prices. Pricing for a cut form the Fed has shifted sharply in recent weeks from June initially out to October now. If we do hear a hawkish message from the Fed, easing expectations this year could disappear entirely, shifting in favour of expecting a hike from the Fed. If seen, this will be firmly bearish for copper prices as USD rallies again. Near-term, only news of a ceasefire or a path to negotiation between US/Israel and Iran is likely to reverse the current outlook and risks.
Technical Views
Copper
Following the breakdown below the bull channel and the 5.8550 level, prices are currently holding a furtehr test of key support at the 5.6260 level. Momentum studies are bearish, however, and risks of a breakdown are seen with 5.4415 the next bear marker if we do break lower.
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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.