Shutdown Optimism
Copper prices saw a sharp move higher yesterday as risk assets cheered an expected end to the US govt shutdown. News that a compromise bill achieved enough bipartisan support to pass the Senate this week and will now go before the House has raised hopes that the US federal govt will soon be reopened. Pressure to agree a deal looks to be building with the Thanksgiving holiday looming and the prospect of travel chaos if flights remain disrupted. As such, a deal now looks likely to be announced in the coming days and should see commodities prices rebounding further.
Better China Data
Copper prices have also been helped this week by Chinese data showing that deflation has eased there recently. PPI data was seen rising last month above forecasts, moving back into positive territory. With a US/China trade deal now in place, near-term expectations are improving which should continue to bolster the copper demand outlook.
Fed Easing Expectations
Fed easing expectations should also remain an underpinning factor for copper here. With the market pricing a roughly 65% chance of a cut in December, there is room for this figure to jump, putting fresh pressure on USD while lifting commodities prices. Once the shutdown ends and postponed data from the period starts to feed through, any fresh downside in jobs and inflation data should see a jump in dovish pricing, creating stronger upside in risk assets.
Technical Views
Copper
The sell off in copper has stalled for now into a retest of the bull channel lows, with price turning higher again. While the channel holds, focus is on a fresh test of the 5.1985 level with 5.4415 above as the higher target to note. If the channel lows break, 4.8010 is key support to watch.
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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.