China Optimism Growing
The rally in copper prices is showing no signs of abating as we head into the weekend. The futures market is on course to end the week around 4.5% higher and is up over 11% off the YTD lows, now at its highest level in over two-months. The latest push come son the back of better data out of China with industrial export data seen surging higher last month, adding to optimism that activity in the world’s second largest economy is improving. Recent stimulus measures, and the prospect of further easing, are helping further underpin bullish sentiment, leading to higher demand expectations. New that Chinese copper imports rose to 13-month highs last month is serving as evidence of this stronger outlook.
US Data Impact
The rally in copper prices has been helped this week by mixed US data which has curtailed the Dollar’s recent upside run. While annualised CPI was seen rising for a third consecutive month to 2.9%, some weakness in the monthly data, as well as weaker PPI data, has seen front-end rate-cut pricing creeping back up this week. Additionally, weaker-than-forecast retail sales and a rise in weekly jobless claims have created further headwinds for USD, allowing copper prices room to push higher amidst the broader rally in risk markets this week.
Trump Volatility Risks
Looking ahead, copper prices look well positioned to continue higher near-term as focus stays on the recovery story in China. However, volatility is to be expected with Trump taking office next week and the potential for commodities prices to suffer on news of tariffs and trade restrictions being actioned.
Technical Views
Copper
The rally in copper has seen the market breaking out above the 4.30 level with price now testing the bear trend line from 2024 highs (contracting triangle top). A break higher here will put focus on a test of the 4.5785 structural resistance level which is the bigger barrier for bulls. Outlook stays bullish while above 4.30
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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.