Copper prices retreated nearly one and half percent today. Prices dropped to the one week low, following a slew of hawkish comments from Federal Reserve officials which raised bets on more rate hikes from major central banks. Strength in the dollar also weighed sentiment, as the greenback firmed
The Fed’s Beige Book report, released on Wednesday, showed that economic growth eased in recent weeks, while U.S. inflation continued to run relatively high, which could attract more monetary tightening.
Three-month copper on the London Metal Exchange HG1! fell 1.25% to $8,855 a tonne by earlier European trade, while the most-traded May copper contract on the Shanghai Futures Exchange HG1! declined 0.3% to 69,390 yuan ($10,072.87) a tonne.
Federal Reserve Bank of New York President John Williams said Wednesday that inflation is still at problematic levels and the U.S. central bank will act to lower it.
A Reuters poll of economists showed that the U.S. Federal Reserve is likely to deliver a final 25-basis-point interest rate increase in May and then hold the rates steady for the rest of 2023, and a short and shallow recession this year is likely.
Higher interest rates could spark the dollar, which makes greenback-priced metals more expensive to holders of other currencies.
Yangshan copper premium (SMM-CUYP-CN), which indicates the demand for imported copper into top consumer China, was at $27.50 a tonne on Tuesday, down 45% from nearly five weeks earlier, SMM data on Refinitiv Eikon showed.
Now, focus will shift on PMI numbers from Europe, UK and US, which could decide the entire market move. Data to be released on Friday.
Technical View
Copper prices slipped from the high 798.65, peak of 14 April 2023 and tested 765.50 recently. Prices have dropped more than 1.62% since morning.
On the daily chart, prices are trading on the verge of rising channel line support at 764.00. A break below it will extend the recent fall and Copper prices may test next support 755-748.00 very soon.
Further, prices trading below its 100 and 50 SMA and RSI 14 and 9 SMA also turned negative. Both indicators also supporting to on donwisde momentum.
Alternatively, on the upside immediate resistance 773.50 above it copper prices may recover towards 785-788 in near future.