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Copper price slides on hawkish Fed bets, China-inspired woes

  • Copper price extends the previous day’s pullback from two-month high to refresh one-week low.
  • Markets increase bets on Fed’s 0.75% rate hike in September after Chairman Powell’s Jackson Hole speech.
  • China’s downbeat industrial production data, Sino-American tussles and a fall in copper imports in July weigh on the red metal.

Copper price takes offers to renew one-week low as pessimism surrounding China and the global industrial demand escalate during early Monday morning in Europe. Also exerting downside pressure on the industrial metal prices are the latest jump in the US dollar and the market’s risk-off mood.

That said, the copper futures on COMEX drop 2.55% to the lowest levels since August 18, around $3.61 by the press time. Further, the most-traded October copper contract on the Shanghai Futures Exchange (SFE) was down around 1.0% to near 62,700 yuan a tonne, at the latest.

Weak industrial data from the world's top metal consumer China exert downside pressure on the red metal. That said, China’s Industrial Profits for July fell 1.1% in the first seven months of 2022 versus an increase of 0.8% the previous month.

Not only China’s industrial profits but copper imports for the said month were also disappointing and weighed down on the metal prices. As per the latest data, China’s July month imports of copper ore, refined copper and copper scrap all fell on the MoM, despite posting YoY gains.

Elsewhere, the US-China tussles over Taiwan, amid the latest chatters of vessels moving in Taiwan Strait, join Beijing’s suspension of meat imports from an American firm to raise economic fears and challenge the metal’s industrial demand.

Above all, macro woes of the economic slowdown and the central bankers’ hawkish concerns, led by Fed Chair Jerome Powell, appear to be the key downside factor for copper prices. That said, Friday’s US jobs report for August will be more important as Fed’s Powell recently warned that Americans were headed for a painful period of slow economic growth and possibly rising joblessness, per Reuters.

Amid these plays, the US two-year Treasury yields rise to the highest since 2007, up 2.5% intraday near 3.487% at the latest, whereas the 10-year benchmark adds nearly 10 basis points to 3.129%. Also, market pricing now indicates a 74.5% chance the Fed will hike rates by 75 basis points at its September meeting, per BOE’s FED WATCH tool. It’s worth noting that the US Dollar Index (DXY) also cheers the hawkish Fed bets and firmer yields to rise to the fresh high since September 2002, up 0.50% near 109.45 at the latest.

Author

Anil Panchal

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.

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