Copper Market:

• Copper futures approach $3.9 per pound, reaching highest level since July 14.
• China’s commitment to provide further support boosts demand prospects.
• Copper output decline in Chile signals potential supply constraints amid sustainable energy transition.

Iron Ore Market:

• Prices for iron ore hover around $116 per tonne, close to three-month high.
• China’s hot metal production rises to highest since October 2020, indicating steel mills returning to full capacity.
• Iron ore imports jump by 7.4% annually in June, offsetting contraction in other sectors.

Chinese Economic Outlook:

• Concerns about resource demand and likelihood of government stimulus amid deteriorating economic outlook.
• Steel rebar futures rise on economic support for troubled property sector and construction materials.
• Dryness in Sichuan’s steel-production hub impacts hydropower levels and leads to mill shutdowns.

US Dollar Index:

• US dollar index surges above 101, erasing early losses after strong data.
• US GDP expands by 2.4% in Q2, exceeding market expectations of 1.8%.
• Jobless claims drop to lowest in five months, indicating a tight labor market.

Federal Reserve’s Tightening Stance:

• Federal Reserve implements expected 25 basis point rate hike.
• Fed Chair Jerome Powell emphasizes “data-dependent” approach for future rate decisions.
• Key data supports the case for the Fed to continue its tightening campaign in September.

Chart Technical Perspective of Copper

The macro perspective of the copper market suggests that the upper extreme of the current long-term balanced price range may initiate core short sellers. Additionally, a technical outside bar in the prior year indicates a possible change in the bullish market context to a more bearish one, with rotational scenarios to the downside becoming more likely from a technical standpoint.

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However, upon further examination of the median-term perspective, slight signs of bullishness emerge, possibly targeting the mentioned upper balance extreme again, leading to the formation of a median-term balance area on lower intervals. On the weekly interval, there is some selling resistance around the Year’s developing VWAP, which may have initiated selling pressure. Nevertheless, the market still appears to target the upper value extreme of the Year’s developing value area.

Zooming into the daily interval, we can identify some selling pressure around the upper extreme of the current short-term perspective’s balanced price range. This level coincides with the Year’s developing VWAP, indicating a potential pullback that core long buyers could utilize to reload and add to their positions. Buying levels might be established around the swing lows and the Year’s lower value extreme, with the intention of rotating to the upside at this juncture.

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In the intraday intervals, signs of downside imbalance are evident, possibly leading to an inside day break lower that targets the lower Year’s value extreme in the next week. However, the current structure suggests potential absorption behavior around the lows, which could give rise to the formation of bearish patterns in the price of the base metal.

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The Forward curve could prompt buying towards the higher priced contracts, while long-term investors may seek selling positions to better adjust to the cash prices. The market might exhibit median-term buying patterns around September, potentially indicating a bullish scenario, depending on the development of the monetary policy and auction process in the next weeks.

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