Copper prices decline after facing barricades at around $3.60, DXY concludes correction
- Copper prices have witnessed a steep fall as the DXY concludes a time-based correction.
- Risk-off market mood is forcing investors to channel their funds into the DXY.
- A resurgence of Covid-19 in China has triggered fears of a slowdown in the overall demand.
Copper prices decline after sensing selling pressure around the critical hurdle of $3.625 in the Asian session. The pullback move displayed by the asset after hitting a low of $3.5715 on Monday is losing its stream and now the conclusion of the pullback move is indicating a fresh leg of selling ahead.
The base metal is expected to remain in the grip of bears amid negative market sentiment. The US dollar index (DXY) is set for a fresh upside as investors have started supporting the DXY on hawkish commentary from Federal Reserve (Fed) chair Jerome Powell on guidance over interest rates at Jackson Hole Economic Symposium.
After preferring inflation fix over lower growth forecasts by the Federal Reserve (Fed), the risk-off market mood has underpinned the DXY. The DXY is expected to recapture its two-decade high, recorded on July 14 at 109.29.
Considering the necessary fundamental concepts, the decision of fixing inflation chaos foremost rather than delighting the optimism seems mature. The US inflation rate is skyrocketing, and a one-time exhaustion signal is insufficient to provide a sit-back and relaxed situation for Fed policymakers.
On the China front, the resurgence of Covid-19 cases has accelerated fears of a slowdown in the Chinese economy. Headlines from Reuters that China has reported 1,344 new asymptomatic coronavirus cases in the mainland on Aug 28 vs 1,137 a day earlier has triggered lockdown fears to contain the spread. A tepid demand ahead may weigh pressure on copper prices.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
