Copper price licks its wounds as China’s return jostles with inventory play, recession woes

Copper price picks up bids to snap two-day downtrend, rebounds from one-week low.
Headlines from China, PBOC’s softer fix join mixed news on inventories to challenge metal bears.
Off in the US, Japan and Canada also probe the sellers even as economic slowdown fears underpin bearish bias.
US inflation, Fed Minutes will be crucial for clear directions.

Anil Panchal FXStreet

Although solid US jobs report propelled the hawkish Fed bets and keep the copper bears hopeful, the extended holidays in the US, Japan and Canada allow the metal sellers to take a breather during Monday’s sluggish Asian session. Also favoring the corrective pullback could be the mixed headlines from China and inventory updates for the industrial metal.

That said, copper price on the COMEX rises 0.78% to $3.4032 during early Monday morning in Europe while snapping a two-day downtrend near the one-week low.

The SMM News quotes the latest copper inventory data from the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE) to mention that the LME copper inventory fell to a new low of 102,000 mt in more than five months on September 16 while SHFE copper inventory fell to a new low in more than eight months.

On the other hand, mainland China reported zero covid cases for the second day in a row and favored the corrective pullback in the metal prices. Further, the People’s Bank of China’s (PBOC) lower USD/CNY fix of 7.0992, versus the market’s expectations of 7.1215 and the 7.1211 previous close, also underpin the metal’s rebound.

On the same line could be the news from Chile, the world's top producer of the metal, suggesting that it announced the permanent closure of copper mining stopes related to a giant sinkhole in the northern part of the country, per Reuters.

Even so, the CME’s FedWatch tool signals the 78% chance for the US central bank’s 75 bps rate hike in November, which in turn weigh on the metal prices, especially amid the recession fears. The increased hawkish bias for the Fed could be linked to Friday’s upbeat US jobs report, as well as the Fed policymakers’ rejection to respect the recession woes while terming the task of cooling inflation as the top priority.

Looking forward, the full markets’ return and updates from China can entertain copper traders, as well as the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB), not to forget updates on Russian President Vladimir Putin’s emergency meeting. However, major attention will be given to the Federal Open Market Committee (FOMC) Minutes and Thursday’s US Consumer Price Index (CPI). That said, a likely softer print of the US inflation isn’t expected to ward off downside fears for the metal.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.