Copper price began the week on its front foot; continuing the rebound that has been on for two weeks now. Just like it was in the past week, the US dollar and Chinese data will be two crucial factors influencing the market.
Fundamentals
In the past week, the released Chinese data highlighted contraction in the country’s manufacturing sector. October’s manufacturing PMI came in at 49.5; lower than the prior month’s and analysts’ estimate of 50.2. A figure below 50 is usually an indication of contraction.
Granted, optimism that the country’s real estate crisis is easing offered support to the red metal. At the beginning of the week, HSBC’s CEO, Noel Quinn noted that the government’s measures to bolster the sector are working.
While announcing its third-quarter earnings, the global banking giant’s leader noted, “If you look at the policy correction that took place…they went very deep and hard over a short period of time. The sector itself has bottomed and it now has to recover from that new lower position.” Copper is largely used in the construction industry with the second-largest economy being a major consumer of the same.
In the new week, China’s exports and imports figures will influence copper price movement. This is in addition to the country’s CPI data slated for release on Thursday. The Fed Chair’s speech on Wednesday and overall value of the US dollar in the course of the week will also impact the asset’s prices.
Copper price action
Copper price has been on an uptrend for two weeks now. This is after dropping to a one-year low of $3.5200 per pound on 23rd October. Based on both the technicals and fundamental indicators, the asset may record further gains in the ensuing sessions.
A look at its four-hour chart shows the red metal trading above the 25 and 50-day EMAs, which is a bullish sign. As at the time of writing, it was at $3.7175 per pound.
In the short term, the bulls are keen on strengthening the resistance-turn-support zone at $3.7095. Indeed, it will likely play as a pivot as the bulls strive to boost copper price further. If that’s successful, $3.7340 and the psychological level of 3.7500 will be resistance zones worth watching.
In my opinion, the asset may not rally past the aforementioned level in the short term. In fact, the bulls may not gather enough momentum to reach that zone in the new week.
On the flip side, it may pull back as the week unfolds and investors digest relevant economic data. If that’s the case, copper price will likely find support at $3.6845 or lower at $3.6680. Below that level, this thesis will be invalid.
