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Copper Remains Weak on Friday
Copper prices remain under pressure today despite the sell-off in USD yesterday, as concerns over Chinese demand cloud the outlook. The latest data shows that Chinese copper imports dropped sharply last month, falling 2.3%. Additionally, copper inventories in South Korea and Taiwan, holding stockpiles typically bound for China, were seen rising to their highest levels this week since Q4 2021. On the back of a string of weaker-than-forecast data out of China recently, these figures have underscored concerns over an industrial slowdown in China, fuelling weaker sentiment among copper traders.
US Data Softening Too
Alongside weaker data out of China, a softening outlook in the US is also creating headwinds for copper demand expectations. Yesterday, US inflation was seen cooling to its lowest level in a year over June. With employment readings trending lower and PMI data dropping sharply, fears of a growing slowdown in the US have offset the otherwise bullish impact on copper of a weaker US Dollar. Traders now widely expect the Fed to cut rates twice this year, beginning in September, leading to a sharply lower USD. Looking ahead today, focus now shifts to US PPI data which is expected to fall inline with CPI, keeping pressure on USD for now and likely limiting the downside in copper.
Technical Views
Copper
The recovery rally in copper has stalled for now into a retest of the underside of the broken bull channel, with price since falling back under 4.5785. While below here, a fresh test of 4.3000 support is likely with 4.0145 sitting as a deeper target.
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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.