Copper Rally Stalls on Fresh Tariff Threats
Copper Falls From Highs
Copper prices have stalled at a fresh test of all time highs today as traders react to Trump’s new tariff threats. A report released by the US administration overnight signed that a slew of US trading partners are facing an additional 10% in tariffs after a failing a US probe into forced labour. Canada, Mexico, Taiwan and the UK are among those effacing the increased levies while a 12.5% additional tariff would be imposed on China, Japan, India, Brazil and Switzerland. The prospect of higher tariffs and the risk of subsequent counter tariffs from those countries affected by the move poses a fresh risk to world trade.
Stronger US Dollar
Copper prices have been rallying firmly in recent weeks amidst tightening global supply and rising demand. However, if Trump presses ahead with these tariffs, this could lead to a dip in demand and weakened demand expectations, weighing on copper prices short term. Additionally, any fresh rally in USD on the back of the tariffs, particularly against a backdrop of higher safe-haven demand and hawkish Fed expectations, could further dampen bullish sentiment in copper. Incoming headlines will be closely watched as traders wait to see whether this is another TACO move from Trump. If Trump walks back these threats, copper prices should be well positioned to breakout higher near-term as focus reverts back to tight global supply.
Technical Views
Copper
For now, the rally in copper is stalled into the 6.7190 -level highs with a potential double top forming. Given the bearish divergence in momentum studies readings, risks of a correction lower are seen though the broader bull outlook remains while prices holds above the 6.1090 level.
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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.