Copper: Asymmetric upside risks from US-China trade news – TD Securities

TD Securities analysts note that after months of weakness, which took prices from nearly $6,200/t in mid-July to the mid-$5,000s, copper had a strong rebound to a high of $5,790/t on Thursday.

Key Quotes

“The red metal surged 1.71% as optimism grew that there will be progress in the US-China trade talks, which many believe would go a long way in averting a sharp slowdown in global copper demand.”

“Assuming an equal probability of a failure or success on the trade file, the risks are very much skewed to the upside due to the fact that CTAs and speculative investors are positioned near max pessimism. Indeed, CTAs are at 100% of their historic maximum short exposure, and money managers are also very much overexposed on the short end of positioning.”

“If a trade deal is made, the copper market would likely surge as a tighter than originally expected supply-demand environment would force specs to cover their shorts.”

“Since there is ample room to cut shorts and take on new longs, the price response would be quite robust and could bring copper near the $6,100s. Since the market is already uber short, at least in the short term, a disappointment would likely only force prices to recent lows.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD extends losses to sub-1.3000 area, UK unemployment rate in focus

GBP/USD stays mildly negative just below 1.30 while heading into the London open on Tuesday. UK’s Brexit negotiator shares the same view as PM Boris Johnson, increases the risks of hard departure. UK employment statistics will be the key to clarify on the BOE’s bearish bias.


EUR/USD hovers above multi-year lows amid coronavirus fears, ahead of ZEW

EUR/USD is trading just above 1.0820, the lowest since 2017, as the coronavirus outbreak is taking its economic toll on Apple among others. The German ZEW Economic Sentiment figure is eyed.


Forex Today: Coronavirus takes a bite from the apple, Gold gains, Bitcoin bounces

The coronavirus outbreak's economic impact is growing as Apple, the iPhone maker has issued a warning that it is unable to meet its guidance due to production and issues and closed stores in China. The tech giant's announcement has been weighing on the market mood, pushing gold and the yen higher. 

Read more

Gold: Positive beyond six-week-old falling trendline

Gold prices take the bids above $1585, +0.35%, during the pre-European trading on Tuesday. The yellow metal recently broke a downward sloping trend line stretched from January 08. Early-month top on the buyer’s radar.

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info