Copper has been correcting over the last trading days following all commodities. This is due to a tougher rhetoric of the Fed Chairman. The regulator is poised to push ahead with a rate hike if strong economic data continues to come in. The market is now waiting for the release of the U.S. Non-Farm Payrolls. Figures that are in line or above analysts' estimates, could be negative for the market.
There is a lot of positive sentiment around the copper market in terms of demand, as the metal is actively used in electric vehicles. But this positivity is likely to dissipate if the global economy slumps, and that’s why the plans of central bank governors are coming to the forefront.
However, the fundamental negativity has also been present in recent days.
China's copper smelters are ready to boost their exports. This is a sign that manufacturing and building sectors have not yet recovered from last year's devastating effects. Demand in China has been lower than expected, but it will rebound, according to Fan Rui, an analyst at Guoyuan Futures Co. She anticipates a jump in copper exports in April, prior to a full recovery in the country's demand.
Beijing's smelters have no clear vision for potential exports since domestic outlook is still uncertain, as insiders noted.
The commodities market is under downward pressure after China set its GDP growth target at 5% for 2023. But the government has not announced large-scale measures to stimulate the economy.
TD Securities confirmed that there is little evidence of a potential rise in demand for the metals due to China's reopening.
On the technical front, copper is struggling to break out of the flat, which has been in place for over a month now. The RSI is below the 50-point boundary area. A continued decline with the target of $8,600 is expected. This level is the nearest to the Fibonacci retracement one on the entire growth wave, along with the November 2022 highs. Stop-loss will be placed upon exiting from the bearish Maribozu daily candlestick on March 7. This is a level around $8,960.
Copper is likely to decline:
Take profit – 8600
Stop-loss – 8960
This content is for informational purposes only and is not intended to be investing advice.
