Copper Hit Hard By Dollar Rally
Copper Falls
Copper prices are on course for a heavy loss this week amidst a resurgence in AI uncertainty and fresh USD strength. Concerns over the futures of Nvidia following the recent affair scandal of CEO Huang have hit the company’s stock prices hard this week leading to a fresh spill over into the broader AI space. With big tech names under pressure, copper prices are falling amidst weakened demand expectations. Demand from the AI sector has been a big driver of the upside we’ve seen in copper this year given its usage in chipmaking, battery development and data centres. With the prospect of weaker AI business development on the back of the Democrat sweep in the US midterms, the copper demand outlook is now less encouraging.
China Demand
Away from the AI issue, demand in China remains at elevated levels given the shortages there in the physical market. Copper premiums have hit multi-year highs amidst rising domestic demand and weaker production levels but internally and externally. Global leader Chile has forecast heavily lower output for the year as whole and, as such, the downturn in copper should find equilibrium soon helping prices to stabilise. Looking ahead, the path of USD could see copper prices pushing deeper given the hawkish Fed expectations which have taken hold on the back of recent data strength and hawkish Fed commentary this week.
Technical Views
Copper
The sell off has seen price breaking down below the bull channel, now testing support at the 6.1090 level. This is key pivot for the market and a break lower here will be firmly bearish, paving the way for a run down to the 5.8550 level next.
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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.