Copper Market Commentary – Friday, May 10

Copper Breaks OutCopper prices were seen breaking out to their highest levels in two years today. A combination of a weaker US Dollar and developments within the Chinese macro backdrop have helped fuel a fresh wave of buying. Copper futures are now up around 30% off the YTD lows and look poised for further gains with price now trading at fresh YTD highs. Shifting US Rates ViewA jump in US jobless claims yesterday has weighed heavily on USD sentiment. On the back of last week’s sorter-than-forecast jobs data and the recent Q1 GDP undershoot, traders are sensing a shift in the strength of the US economy. As a result, pricing for expected US rate cuts has moved forward, now favouring September form November previously. Looking ahead, next week’s US CPI reading will be key for markets. If we see any undershooting in the data this will no doubt strengthen September rate-cut expectations, pulling USD lower near-term and pushing copper prices higher. China Demand & QE ExpectationsAlongside USD impact, copper prices are also responding to heightened expectations of potential Chinese QE. The Chinese politburo has signalled a deeper concern for the crisis in the property market this week, raising expectations that fiscal help will follow shortly. Additionally, the latest data out of China shows that copper imports continued to surge last month, despite higher prices, reflecting an uptick in demand. This tallies with the recent strength we’ve seen in China factory data and while this narrative holds, copper prices look likely to remain supported near-term. Technical Views CopperThe rally in copper prices has seen the market breaking back above the 4.5785 level and back above the prior 2024 highs. With momentum studies bullish and price at fresh highs, the focus is on a continuation higher with 4.84 the next target for bulls.   More By This Author:UK Market Commentary – Friday, May 10Gold Market Commentary – Friday, May 10Crude Oil Commentary – Thursday, May 9