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Copper Rally ContinuesThe rally in copper prices continues to gain ground this week with copper futures breaking out to further fresh highs on the year. Copper futures are now up around 33% off the YTD lows and look poised for further gains due to a supportive macro backdrop. Ongoing supply concerns, rising demand in China, and dovish Fed expectations are helping drive price higher here with futures now at their highest level in over 2 years.
Chinese DemandIn China, industrial activity has been rebounding in recent months with imports of copper growing, despite the rising cost. With supply levels still down on the back of the pandemic and demand rising, copper prices look likely to remain underpinned until we start to see new mines coming on board. With Anglo American recently rebuffing BHP’s takeover attempts, supply levels look set to maintain the status quo for now.
USD in FocusUSD is also a big focus point for copper. With US data recently weakening and the Fed being clearer about its intentions to press ahead with easing, copper traders look to be anticipating a weaker US Dollar over H2, which should further stoke demand for copper. Tomorrow’s US CPI reading will be pivotal for markets near-term. If we see any undershooting of forecasts, this will be firmly bullish for copper through the end of the month. Technical ViewsCopper 
The rally in copper has seen price blowing through several big resistance levels this year. Price is now testing the 4.5785 level and with momentum studies bullish, focus is on a break higher here and a test of the 4.84 highs next. To the downside, 4.2975 remains the key support to note. More By This Author:US Market Commentary – Tuesday, May 14U.K. Market Commentary – Tuesday, May 14US Market Commentary – Monday, May 13
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