Copper Price Trend May Reverse On FOMC Minutes

Copper prices have been moving alongside priced-in Fed monetary policy expectations for much of the year. That makes sense: the US-China trade war has threatened to amplify a global economic slowdown underway since early 2018, stoking bets on a dovish turn from the US central bank as well as darkening demand prospects for the cycle-sensitive commodity.

Chart of copper prices vs 2020 Fed interest rate cut expectations

Chart created with TradingView

A parallel upturn since early September appears to reflect newfound hope that Washington and Beijing are on the cusp of some sort of “phase 1” accommodation that lays the groundwork for a broader deal. Indeed, the Fed directly cited diminished trade war risk when it signaled a pause in its interest rate cut cycle following October’s meeting of the FOMC policy-setting committee.


The release of minutes from that gathering now loom large as recent gains put the benchmark HG copper contract within a hair of resistance guiding it lower since mid-2018. An upbeat tone reiterating Chair Powell and the company’s newfound optimism may cheer investors and stoke risk appetite, pushing the metal upward. A topside break confirmed on a daily close above 2.7705 initially exposes the 2.8355-8710 zone.

Alternatively, the revelation of a cautionary undertone moderating recent cheer might pressure copper lower. In fact, markets have had ample time to price in the pause in rate cuts, so even a status-quo result may be dismissed as insufficient to drive continued gains and trigger profit-taking. If that translates into a close below rising countertrend support at 2.6035, the 2.5160-5520 region beckons next.

Copper price chart - daily

Chart created with TradingView

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