Trade War Impact
Copper prices are starting the week on a softer footing with the red metal down sharply through early European trading on Monday. The intensifying trade war between the US and China is creating major headwinds for the market and with US tariffs on steel and aluminium imports to go live this week, the impact on copper is expected to deepen. Alongside developments in the trade war landscape, traders are also reacting to the latest economic data out of China which saw weaker-than-forecast CPI and PPI readings last month.
Weaker China Data
Chinese CPI was seen cooling to -0.7% from 0.5% prior, below the -0.4% the market was looking for. Similarly, PPI was seen dropping 2.2% on the month, deeper than the -2% reading the market was looking for. The data highlights softer economic activity at a point when the Chinese economy is becoming more vulnerable to the growing trade war between it and the US.
Bearish Outlook
With Chinese countermeasures against the US now in play and US tariffs on steel and aluminium to go live this week, fears of a further uptick in the trade war are weighing heavily on the copper demand outlook in China. Additionally, fears of the US entering recession this year as a result of the trade war are adding to bearish sentiment following Trump’s worrying comments that the US economy is in a period of transition due to tariffs. Against this backdrop, copper prices look likely to continue lower near-term.
Technical Views
Copper
The failed second attempt at a breakout above the 4.8010 level has seen copper prices turning sharply lower. With an interim double top in play, focus is now on the 4.5785 level which bulls need to defend to a prevent a breakdown towards 4.30 next.
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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.