September High Grade Copper futures are expected to open sideways to lower this morning. The current rally appears to have stalled at a retracement zone as investors pared positions ahead of key data from China. Although the market seems to be on an upswing, investors still aren’t sure about demand. Better than expected data on consumer prices, producer prices and retail sales later from China later in the week will be signs the economy is picking up. This could trigger a surge in copper prices.
Also exerting an influence on copper prices is the uncertainty over the Fed’s decision to begin reducing monetary stimulus. Recent sluggish economic data is causing investors to question whether the U.S. is strong enough to warrant a cut in the $85 billion in monthly stimulus. Early forecasts are calling for a September cut of at least $20 billion. The Fed will have the rest of the month to look at economic data before making its decision at its September 17 – 18 monetary policy meeting.
Technically, the series of higher tops and higher bottoms means September High Grade Copper futures are in an uptrend on the daily chart. Yesterday, however, the market ran into 50% resistance at 3.1990 before backing down into the close. A major downtrending angle at 3.1925 also provided resistance.
Although the uptrend is not being threatened, the market could test uptrending Gann angle support at 3.1565. A sustained move through this angle could trigger an even further decline to another angle at 3.1565.
Today, the market starts out with a slight bias to the upside. Although there aren’t any major U.S. economic reports, investors will be focused on U.S. interest rates and the U.S. Dollar. Higher rates could boost the dollar, putting pressure on copper prices. If the Greenback continues to fall then look for copper prices to get a boost.