Copper price rose subtly on Tuesday as the US dollar eased. Notably, slow consumer spending in China curbed its gains. As at the time of writing, COMEX futures were up by 1.16% at $4.0225 per pound. In the ensuing sessions, additional data from the two leading economies will further impact the red metal.
US dollar
In recent weeks, copper price has been finding support in the weakening US dollar. More recently, financial markets have been digesting the economic data released in the past week.
Early last week, the manufacturing PMI highlighted contraction; an aspect that weighed on the US dollar. However, this also yielded concerns over the metal’s demand in the largest economy; an aspect that curbed its price gains.
Fast forward to Friday and the US jobs data further blurred the outlook. The released figures showed that the demand for workers remains substantial despite the weakening economy. With the subsequent rebounding of the greenback, copper price gains remain curbed; trading on a rather tight range for the third session in a row.
With the US CPI and Fed meeting minutes set for release on Wednesday,the red metal may be subject to subtle movements in the immediate term. Investors await further cues on the Fed’s position amid signs that inflation and the labor market are easing. A rather dovish stance will likely offer some support to copper price.
China’s inflation
In addition to the US dollar, China’s economy has been a persistent driver of copper price. The latest impact is from the CPI numbers released earlier on Tuesday. According to National Bureau of Statistics, consumer prices rose by 0.7% in March compared to the prior month’s reading of 1%. Similarly, producer prices dropped by 2.5% as expected. In February, the latter fell at the same pace.
The numbers come about a week after the country’s manufacturing PMI signalled that the sector was struggling to expand. While the Chinese economic recovery remains at play for copper price, it appears not to be as pronounced as the markets had anticipated. This further explains the red metal’s curbed gains.
Copper price forecast
A look at the COMEX copper futures daily chart shows a rather neutral outlook. In particular, it is hovering around the 25 and 50-day EMAs that are converging around 4.0265. Besides, its relative strength index (RSI) is at 49.
Granted, the bulls remain in control for as long as the red metal holds steady above the support level of 3.8455. Even so, they may not gather enough momentum in the short term to retest the YTD high hit in mid March at 4.3600.
More specifically, 3.9235 is a support level worth watching. On the upside, the focus will be on whether the metal can attract enough buyers to break the resistance at 4.0495. Even with a probable rebound, it may have its gains curbed at 4.1035.
