US Jobs Concerns Stall Copper Rally
The recovery rally in copper has lost a little momentum this week with prices seeing a shallower, more laboured move higher. US Dollar weakness has been a strong supporting factor for copper over recent weeks with an uptick in Fed easing expectations weighing on the greenback. However, fresh concerns over the health of the US economy are sapping bullish momentum a little here. Yesterday, US payrolls over Q1 were revised lower by 818k. Given that the jobs market has already been trending lower in recent months, this downward revision reflects even greater weakness in labour conditions, muddying the demand outlook for copper.
US Manufacturing Today
Looking ahead today, focus will be on the latest US manufacturing PMI. Now back in negative territory, weakness in the reading last month had added to bearish sentiment in copper. If we see any further downside in the data today, this could well fuel more sustained selling in copper. On the other hand, if we see a rebound in the reading this could well revive buying in copper, particularly given the bearish USD backdrop.
Chinese Manufacturing Next Week
Next week, we’ll then receive the latest Chinese manufacturing data. Emergent weakness in Chinese industrial data over Q2 was a big driver behind the reversal lower in copper this year. As such, incoming data will be closely watched with any fresh weakness likely to turn copper lower while signs of a recovery should offer a bid near-term.
Technical Views
Copper
The rally off the 3.9350 level has seen the market breaking back above the bear channel highs. However, while 4.3000 holds as resistance, focus is on a continued push lower and a break sub-3.9350 next. Above 4.3000 however, 4.5785 will be the next objective for bulls.
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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.