Copper is consolidating its recent retreat from a three-week high on the bids.
The US dollar is weakening in the face of sluggish markets and a cautious atmosphere ahead of the FOMC minutes.
China intends to enhance the use of steel scrap and the manufacture of recycled nonferrous metals.
Despite the previous day’s U-turn from the highest levels since mid-June, copper prices keep the weekly trading range below the 100-DMA. However, at the end of the pre-European session on Wednesday, the commodity had picked up bids and was trading at $4.2825, up 0.74 percent intraday.
The price was pushed down on Tuesday by the rise in the US dollar, which was fueled by the market’s risk-off mentality as a result of the coronavirus (COVID-19) difficulties and fears about the economy’s recovery. Copper purchasers have recently benefited from the dollar’s recent lack of momentum as well as price-positive news from China.
By press time, the US dollar index (DXY) had bounced off an intraday low of 92.49, down 0.03 percent on the day. While the covid troubles persist, cautious attitude ahead of today’s release of the important Federal Open Market Committee (FOMC) Meeting Minutes appears to be testing the greenback buyers.
“China wants to boost its usage of steel scrap by 23 percent to 320 million tonnes by 2025 and to enhance production of recycled nonferrous metals, including copper, to ensure supplies and meet the country’s climate goals,” according to Reuters.
In the midst of these maneuvers, US Treasury rates are hovering near their lowest levels since late February, while stock futures are devoid any direction white writing.
Moving forward, the FOMC minutes and news from China will be crucial for copper traders. Traders should keep an eye out for more bullish signs as China tries to overcome hawkish predictions on monetary policy adjustment. The Fed policymakers’ split, on the other hand, will pose a challenge to further price increases.
Since last week, copper prices have been trading below the 100-day moving average, and the MACD indicator has failed to indicate a trend change. However, before reaching June’s low of $4.0880, sellers may wait for a fall breach of $4.2250 to take fresh entry.
Meanwhile, the bulls will need confirmation from a downward sloping trend line from May 10 near $4.3950 to back up an upside break of the 100-DMA level of $4.2910.
Sideways is the current trend./n
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