Copper Climbs Above Bear Channel
The sharp drop in USD last week has fuelled noteworthy moves across markets. Commodities markets have benefitted strongly from a weakness in USD, as evidenced by the rally we’ve seen in copper. Following heavy sideways action since early July, copper futures broke out to their highest level since June last week. While a stronger start for USD this week has seen the market conceding some of these gains, the near-term view remains bullish with USD vulnerable to further losses this week.
Additionally, any positive news around China reopening should also feed into higher copper prices. Recent chatter around a potential March reopening of the Chinese economy (while denied so far) has raised the prospect in traders minds and as such, copper prices look to have some near-term upside risks should this story gain fresh traction at any point. Traders will therefore be keeping an eye on today’s meeting between Biden and Xi as well as the ongoing G20 meetings this week for any encouraging signs regarding potential reopening of the Chinese economy.
The breakout above the 3.7300 level and the bearish channel top ha seen copper futures hitting their highest levels since June. With both MACD and RSI bullish, while above here the focus is on a further push higher and a test of the 4.1185 level next, a break of which opens the way for a higher push towards the 4.4830 level next.