Commodity markets are under pressure today. Aluminum is also declining but looks better than other commodities. The main reason for the decline is strong data on the US CPI. Continued high inflation could make the FRS raise interest rates more aggressively.
Currently, the impact of post-zero-COVID China's booming economy on commodities is a clear illustration of how market sentiment and actual business activity of participants don’t match.
The cost of commodities ranging from iron ore to crude oil and copper has surged since Beijing abandoned its zero-COVID policy. However, prices have changed since that time.
However, Chinese imports of main commodities haven't yet shown any significant uptick, even though it remains at a relatively high level.
The effect of the opening of China has already lost its strength. Now the markets will look at real economic data, so there may be unpleasant surprises ahead.
The majors of the US metallurgical industry don’t see signs of a recession. However, they say that demand for cars is currently lower than expected by the market. The reason for this was the increase in interest rates on car loans. Metallurgical industry participants forecast weak demand for construction products and a reduction in the sector in the second half of the year. Weak demand may continue to put pressure on aluminum prices.
By comparison, most commodity assets decrease by more than one percent today. At this time, the fall of aluminum is nearly two times weaker. No positive data on the metal came out, so it traded better than the market. You can take advantage of this inefficiency to open a short position in aluminum.
Four bearish candles in a row on the daily timeframe show the strength of the current downtrend, and it confirms the opportunity for a short. $2,355 may be a target of decline, all main support levels are located there. We could place a stop-loss near yesterday's high of $2,430. Yesterday, there was a resistance level on the hour timeframe, after which a new wave of decline began.
Decrease in aluminum price:
Take profit — 2355
Stop-loss — 2430
This content is for informational purposes only and is not intended to be investing advice.
