Copper Pressured on Poor Chinese Data & Covid Jitters
Copper Analysis
Copper had risen to record highs in March, amidst the broader boom in commodities, in the aftermath of the war in Ukraine. Since then however, it has slumped due to recession fears and the aggressive monetary tightening by most major central banks.
This led to a seven-month losing streak and the lowest levels in two years, but manages to rebound in November, with gains of around 11% at the time of writing. This week though, the recovery falters at key technical levels, amidst poor economic data from China and rising Covid-19 cases.
China is the world's second largest economy and amidst the top producers and consumers of copper. Data from earlier in the week, showed that Retail Sales fell by 0.5% year-over-year in October, the lowest level since May. Industrial Production grew by 5%, a markdown from last month's 6.3% print.
Earlier in the month, China had announced an easing is some quarantine measures [1], but remains committed to its zero-Covid policy as infections are on the rise. Health authorities today reported 20,888 new asymptomatic cases for Wednesday, from 18,576 in the previous day. [2]
As a result, Copper declines this week, unable to hold above the key 200Days EMA and the 38.2% Fibonacci of the 2022 High/Low drop. This creates risk for a test of the EMA200 (at around 3,570), but new catalyst may be required for daily closes below it. This would put bias back on the downside and make it vulnerable to further weaknesses to 3.300, which would bring the two-year lows back in the spotlight.
On the other hand, Copper had managed to end last week above the aforementioned key tech levels and finds reprieve today. As such, it has not lost the ability to push for fresh highs towards 50% Fibonacci (4.085), but does not inspire confidence at this stage for further advance to 4.273 and beyond.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 17 Nov 2022 https://english.www.gov.cn/statecouncil/ministries/202211/14/content_WS6371a7dec6d0a757729e31a5.html | |
| Retrieved 24 Sep 2023 http://en.nhc.gov.cn/2022-11/17/c_86184.htm |
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