Copper Bounces Back

Copper prices are pushing higher again on Tuesday, seemingly shrugging off the rebound we’re seeing in the US Dollar today. Copper futures are now up 5.5% from last week’s lows and are crucially back above the 6.1090 level which has been a key pivot for the market over the year so far. The move comes amidst some better data from China overnight with the manufacturing PMI there seen rising slightly last month. This is the latest in a small run of better China data which is helping lift demand expectations and underpin price consequently.

US/Iran Headlines

Looking ahead this week, trader will be monitoring incoming news flow around the Middle East where headline volatility continues to cause whipsaw in markets. The US and Iran both reaffirmed the ceasefire after tit-for-tat attacks over the weekend, which has helped fuel some relief action in risk assets. However, peace talks have not yet resumed and Iran has so far turned down the US proposal to meet in Doha today for talks. As such, near-term risks remain elevated with the situation continuing to be highly changeable.

USD On Watch

Away from the Middle East, copper traders will also be watching USD flows. A softening in tightening expectations has also helped feed into better copper demand expectations here and if this narrative gains traction we could see USD pulling back near-term, allowing copper (and risk assets generally) room to push higher. Thursday’s NFP data will be the key element to watch with copper bulls hoping for some undershooting of forecasts to help temper Fed rate hike expectations.

Technical Views

Copper

The rally in copper has seen price breaking back above the 6.1090 level, signalling the end of the correction lower. While price holds above here, focus is on a push beyond the current 6.2845 resistance, and a return to highs. If we do break lower again, however, the bull channel lows and 5.8550 level will be the next support to watch.