Copper Rally Continues
Copper prices are continuing to push higher on Tuesday with the futures market now up around 9% from the YTD lows. The market has been on a solid run higher recently, recording just one losing day over the last eight sessions. The move higher comes despite recent USD strength and reflects better demand expectations linked to robust US economic data and anticipation of fresh stimulus to come in China. Indeed, there have been signs recently that Chinese demand is picking up with the latest import data showing that copper imports surged by 18% last month, hitting their highest levels in over a year.
China Optimism
The Chinese governments recent stimulus measures, both fiscal and monetary, seem to finally be having a positive impact on activity in the world’s second largest economy. Indeed, the recent shift by the PBoC towards an easing bias, the first such move in over 15 years, has fuelled expectations of further easing to come and has been effective in bolstering sentiment.
USD Strength
While USD strength is typically a headwind for commodities prices, the current market focus seems to be more aligned with the resilience in the US economy. Fresh strength in jobs data, as well as continued strength in growth readings, has assuaged any previous fears that the US is headed for recession, which looks to be boosting copper prices for now via increased demand expectations.
Trump Impact
Looking ahead, the market is vulnerable to near-term volatility as Trump takes office next week. Expectations of fresh tariffs and trade wars pose a big risk to commodities prices and traders will be watching carefully to see how Trump acts. If tariff actions transpire to be less severe than previously thought, however, this could further boost copper prices near-term.
Technical Views
Copper
The rally in copper has seen the market breaking back above the 4.30 level. While above here and with momentum studies bullish, the focus is on a continued push higher. The bear trend line from 2024 highs will be the next resistance to deal with ahead of the 4.5785 structural resistance.
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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.