Copper is trading at a down sloping green trendline on its weekly chart at 1. It is also facing the challenge of overcoming its black 30-week EMA (2). The base metal's RSI has popped above 50 at 3, which is the bullish side of the indicator. It will be interesting to see if it can hold above 50 because below has been the norm since April (blue rectangle). If it can hold above this threshold, an underlying momentum will likely aid copper in overcoming the black 30-week EMA and the down sloping trendline.
Copper is a good proxy to monitor regarding the soft-landing scenario. I.e. a stronger copper price likely points to a softer-landing due to it being a key input in industry.
However, a failure to move higher will be a worrying sign. It struggled on Wednesday on jobless claims data, poor core durable goods and also the University of Michigan inflation expectations. If the base metal declines it will be regarded as a negative development for the risk side of the market, and potentially point to a harder landing then currently expected.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.