Copper Lower Amidst Rising Macro Risks
Hawkish Fed Risks
Copper remains under pressure at the start of the week following the heavy reversal from highs seen last week. Copper prices plunged last week amidst a hawkish repricing in the Fed rates outlook on the back of a fresh jump in US inflation. Additionally, a lack of progress in talks between Trump and Xi on Iran last week was met with disappointment cross risk markets, driving copper sentiment down further. US inflation is now almost at 4% and with three members of the Fed dissenting from the bank’s dovish stance at the last meeting, risks are skewed towards a further hawkish shift which could start tod rag commodities prices down lower if frate hike pricing this year rises above the 50% mark (currently around 35%).
Iran War Risks
On the Iran war front, with little progress in negotiations and several rejected peace proposals from both sides, traders have little reason to believe the conflict will end soon. With energy prices set to stay elevated accordingly, keeping inflation pressures stokes, copper prices are vulnerable to a further drop lower. Trump warned this week that Tehran is ‘running out of time’ to reach an agreement, echoing earlier threats of destruction if a deal is not agreed. While hostile rhetoric remains, copper prices should stay skewed lower near-term as USD pushes higher on safe-haven demand.
Technical Views
Copper
Following a false break above the 6.5830 level price has since reversed lower and is now testing below the 6.2845 level. Below here, the bull trend line and 6.1090 area will be the key support zone for bulls to defend in order to maintain the broader bull bias.
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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.