Copper Recovery Continues

Copper prices continue to push higher at the start of the week, The metal is enjoying a mild recovery on the back of recent losses as USD weakness fuels fresh demand. Weaker US inflation and an uptick in Fed easing expectations have combined to weigh on USD currently which is helping keep copper prices supported here. Looking ahead this week, there is plenty of potential for USD to move lower in response to the July FOMC minutes and Fed chairman Powell’s comments at the Jackson Hole Symposium. If these two events are seen as dovish, USD looks vulnerable to a fresh push lower which should help drive the copper recovery higher near-term.

PMIs In Focus

However, there are some bearish risks for copper this week. The latest round of PMI data sets could prove tricky for copper bulls if manufacturing activity is seen taking another leg down, particularly in the US. Weak factory readings last month added to demand concerns in copper, weighing on the metal. While US recessionary fears have faded somewhat on the back of strong US retail sales last week, fresh downside in PMI readings this week could well put them back in focus.

Technical Views

Copper

The sell off in copper has stalled for now into a test of the 3.9350 support level. Price has bounced and is now testing the bear channel highs. With momentum studies bullish, a break higher here will put focus on a test of the 4.3000 level next. To the downside, if we break back below the .39350 level, 3.6720 will be the next support to watch.