Copper, Chinese, Australian Dollar – Call Points:
- Copper under recent pressure as China’s growth problems dominate the headlines
- AUD / USD following copper lower, falling to 0.7327 during Monday trading
- Products will remain in focus as the Delta option jeopardizes reopenings
Copper has come under pressure recently, while the Chinese economy has shown signs of slowing in recent months. March 2020 lowest rise trend line test may be just around the corner about 4.28 / 29, with the line still unrealized. There is a headwind for red metal, as Chinese data point to a general decline in demand for the commodity. Although these concerns briefly penetrated global stock markets, commodities have been hit particularly hard as closures and restrictions are halting China’s economic activity. July customs data showed that demand for imports has weakened oil, iron and copper; all of which have moved down recently.
Copper is also at risk from most developments in the Delta Covid variant, as the number of cases is higher worldwide. The headwind will also remain a concern for “top growth” as China’s recovery begins to normalize and the Federal Reserve begins to prepare to reduce asset purchases. The global slowdown could limit short-term demand for copper and other raw materials, thus potentially limiting growth. Further exemptions from Chinese metal stocks together US dollar strength, may exacerbate the recent bear surrounding the copper. Given the uncertainty about what the rest of 2021 might look like, market participants should be wary of bull and bear teas.
Copper daily schedule
The chart is provided by TradingView
Copper prices appear to be limited in the near future to a triangular pattern that has developed since May. After the upper trend line test in July, the price of the rising trend line has weakened. Here, support can be found in area 4.28 / 29, slightly below current levels, and this can be an appetizing point for bulls, as copper cannot break below this basic support level. In the event of a short-term bounce, resistance may come in the form of a 50-day moving average in the 4.37 region. Much of the short-term direction of copper may be related to China’s economic conditions, which appear to deviate from Western countries. Although bear sentiment appears to be prevalent in the light of recent pricing, bulls could regain control by re-testing key support slightly below current levels.
– Written Brendan Fagan, trainee
Be in touch Brendan, use the comments section or below @BrendanFaganFX Twitter