Global Outlook Darkening?
If the long-held market wisdom which states that Copper is a reliable barometer of global economic health and economic expectations, is correct, then the outlook is turning steadily worse. Copper futures have sunk around 30% from the year’s highs as recessionary fears have moved further into the spotlight over the year. A combination of a higher US Dollar, soaring inflation and tightening global monetary policy is raising recessionary risks – added to this, the recent lockdowns in China and the risks of further lockdowns.
With this in mind, copper prices are tumbling sharply and look to set to continue lower near-term. With hawkish Fed expectations leading the US Dollar higher, there appears little on the horizon to fuel a reversal in copper. The only plausible option at this stage is the Fed refraining from a larger .75% hike in July and sticking with the currently signalled .5% hike. This might raise the prospect of the Fed easing off on the aggressive tightening currently projected. Failing that, copper looks vulnerable to much deeper prices near term.
Technical Views
Copper
The breakdown below the 4.1185 level was a major, bearish development for Copper prices confirming the breakdown of the bullish trend line. With price now blowing through further support levels, the next support area to monitor will be the 3.3445 level and 2.9610 below that.
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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.