Copper price hovers below $4.20, upbeat Chinese data justifies rise
- Copper prices have turned sideways but should resume their upward journey based on strong data from China.
- Chinese industrial production turned positive at 0.7% versus -2.9% previously reported.
- The expectation of a 75 basis point rate hike by the Fed is supported by the CPI hike announced last week.
Copper, COMEX futures, showed firmer reactive buying action after hitting a low of 4.1305 late in the New York session. The asset has now reversed after a reactive buy in which market participants view the asset as a value bet. The distribution of stocks in the range bound move will push copper prices higher towards 4.2300.
A significant recovery in copper prices is supported by a rebound in positive market sentiment and the release of upbeat Chinese economic data.
Investors await the announcement of the interest rate decision by the Federal Reserve (Fed), which is expected to remain extremely hawkish, as soaring inflation could only be brought under control by extremely restrictive measures. The odds of a 75 basis point (bp) rate hike are fueled by last week’s firmer inflation data. The US Dollar Index (DXY) remained firmer during these trading sessions on expectations of a higher interest rate announcement. The DXY posted some signals of exhaustion at the open, but recouped the majority of its losses now that the clouds of uncertain Fed policy are looming again.
Meanwhile, upbeat economic data from China despite the two-month period of serious lockdowns in Shanghai and Beijing supported copper bulls. China’s National Bureau of Statistics reported annual retail sales at -6.7%, much better than expectations of -7.1% and the previous print of -11.1%. While Industrial Production turned positive as it landed at 0.7%, significantly higher than the consensus of -0.7% and the old figure of -2.9%.