Copper Drops On Hawkish Fed Repricing
Hawkish Fed Impact
Copper prices remain sold today as the futures market heads for a third consecutive day in the red. The move lower comes amidst the hawkish shift in traders’ Fed outlook amidst the latest US CPI increase seen yesterday. Selling had begun ahead of the data, light of bullish forecasts for the release. These forecasts were ultimately topped yesterday seeing Fed tightening expectations for this month and December jump accordingly. Against this backdrop, copper prices have recoiled with focus shifting await from recent supply concerns to settle firm on Fed expectations for now. Indeed, the move lower comes despite some weakness today in USD amidst the rout in AI stocks on emergent funding concerns which has put pressure on the greenback.
Supply Issues Remain Key
Despite the sell off, the move lower is likely to find strong demand supply issues provide a strong scaffolding for market sentiment. Some near-term downside volatility is likely but with supply from leading global producer copper still at multi-decade lows, it’s hard to picture copper prices moving meaningfully lower. Industrial strike action, site closures due to repair and maintenance and/or extreme weather have hit Chilean output hard this year and with big miners reducing their output forecasts for year end, copper prices should remain supported into year end.
Technical Views
Copper
Copper prices have turned lower from the 6.7190 level once again with the region continuing to act as a cap ahead of the higher 6.8615 zone and record highs. While below here, a further push lower and a retest of support at 6.3750 looks likely. This will be the key pivot for bulls to defend and the broader bull outlook holds intact while price remains above this 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.