Copper futures rose over one percent on Tuesday, rebounded from the one week low touched on December 20th, aided by a slight pullback from the dollar while markets assessed the outlook for Chinese industrial demand.
Softer US PCE inflation in November aided hopes that the Fed may deliver more rate cuts than projected in the hawkish dot plot released last week, lifting dollar-priced assets and easing concerns about poor manufacturing in the US. Still, the lack of detail from China regarding its pledges of proactive fiscal support added to worries that the signals act as optics over concrete action.
The latest PMI data showed that Chinese manufacturing activity expanded only slightly in November, showing limited reaction to the ample monetary easing from September.
The outlook for Chinese manufacturing was also pressured by threats of tariffs from the incoming Trump presidential administration in the US, paring demand for industry from the world’s top copper consumer.
China plans to boost fiscal support for consumption next year by increasing pensions and medical insurance subsidies for residents, and expanding trade-ins for consumer goods, according to a finance ministry announcement on Tuesday.
Meanwhile, Chinese authorities have agreed to issue 3 trillion-yuan ($411.04 billion) worth of special treasury bonds next year, Reuters reported on Tuesday, citing two sources.
Technical Outlook – Copper Futures
The prices settled at 801.60, up 1.06% on Tuesday compared to the previous day’s close of 793.25.
Since December 20, prices have been consolidating above their one-week low of 790, forming an indecisive candlestick pattern on the chart. Meanwhile, the RSI (14) and its 9-SMA moving average have turned positive, rising from 35.50 to 41.27, which supports the possibility of a short-term recovery.
On the upside, a break above 802.80 could pave the way for targets at 806–809.80. Elsewhere, any dip towards 798–796 is likely to attract buying interest.
On the downside, a fresh bearish move could emerge below 790, with potential targets at 785–779.50.
Until then, Happy Trading!
Commodity Samachar Securities
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