Copper Slides As Traders Eye Hawkish FOMC Risks
Copper Lower
Copper prices are turning lower on Tuesday as traders look ahead to tomorrow’s July FOMC meeting. Pricing for a hike tomorrow has risen to over 33% reflecting a great deal of uncertainty in the market just one day out from the decision. The recent re-escalation of the US/Iran war has complicated the picture for traders with USD rising again on the view that the rebound in oil prices could send inflation higher again, particularly if prices remain at higher levels for longer.
US/Iran Peace Optimism
The weakness in copper today comes despite Trump’s claims yesterday that the US and Iran had resumed peace talks. Trump told media that he felt there was a good chance a deal could be done, despite Iran claiming talks were not underway. The market reaction in copper today suggests that the Fed story remains the main driver near-term with copper softer despite the continued sell off in oil prices. Looking ahead, tomorrow’s meeting will be pivotal for copper near-term. If the Fed holds rates steady but is seen leaning on the hawkish side in the post-meeting press conference, this could send USD higher, putting fresh pressure on copper. However, if the Fed holds rates steady but strikes a more neutral tone after the meeting, this could see rate hike pricing weakening, leading USD lower and copper to rebound higher.
Technical Views
Copper
The rally in copper has stalled for now into the 6.5830 level with price now turning back down to test support at the 6.2845. The market remains in a broad bull channel with focus on a fresh push higher eventually and a break above the 6.7190 level. To the downside, 6.1090 is the next 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.