Dovish Fed Bullish for Copper
Copper prices are bouncing back this week as a dovish repricing of the Fed rates outlook is helping lift demand expectations. The futures market gapped higher today, now up around 3% from yesterday’s close as traders react to fresh US data weakness yesterday which has seen December easing expectations rise again. The CME group is now pricing an 85% chance of a cut next month, this is up from below 40% at the start of last week, reflecting a heavy shift in sentiment. With USD starting to weaken accordingly, copper prices look poised for furtehr upside as we see the broader risk complex (equities, commodities, crypto) start to lift from recent lows. Looking ahead today we’ve more US data on deck and any furtehr weakness should see copper prices lifting higher as pricing for a December continues to grow.
Codelco News & Market Tightness
Alongside the dovish shift in Fed outlook, copper prices are also being buoyed by news that Chilean copper producer Codelco is looking to increase premiums for Chinese buyers. This suggests a shift in favour of prioritising US customers and should be bullish for price going into next year. With tight supply still an issue and fears of further market tightness, copper price looks set to rise further near-term particularly while also supported by dovish Fed expectations.
Technical Views
Copper
The rally in copper prices has seen the market pushing back up into the bull channel with price now testing the 5.1985 level resistance. With momentum studies turning higher, focus is on a breakout towards the 5.4415 level next.
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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.