Copper Recovery Stalls on Revived Risk-Aversion
Copper Reverses on Thursday
Copper prices have come under fresh selling pressure today following a recovery earlier in the week. The move lower in USD through the first half of the week amidst an uptick in risk appetite saw a broad improvement in commodities prices with copper benefiting from the move. However, the resurgence in USD today on the back of hawkish war comments from Trump yesterday mean copper is now back under offer as risk aversion takes hold and commodities prices recoil. With USD remaining strong mid-morning, risks look skewed towards a continuation lower in copper.
Better US Data – Hawkish Fed View
Away from incoming news-flow around Iran, USD is also being bolstered by better data this week. The ADP jobs number yesterday came in above expectations, as did core and headline retail sales. Focus is now on the weekly jobless number later today ahead of the headline NFP release tomorrow. With traders eyeing a more hawkish outlook for the Fed amidst inflationary risks linked to the war, any positive data is simply reinforcing that view, keeping USD supported. Against this backdrop, copper prices should remain weaker particularly if we see USD pushing higher in response to any upside data surprises today/tomorrow.
Technical Views
Copper
The failure in copper ahead of retesting the broken bullish trend line is a worrying technical signal for bulls, with risks of a fresh leg lower now seen. 5.4415 will be the key near-term support to watch with the YTD lows in focus next if we break below that level. Topside, the trend line retest and 5.8550 level will be the key resistance points to note.
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