Copper

AUD/USD has equaled its longest losing streak since August 2019, hammered by deteriorating sentiment towards the outlook for the Chinese economy and investor risk appetite, especially towards big tech. But with signs of stablisation in commodity and US stock futures, the grounds for a squeeze higher are growing.

AUD/USD tracked copper prices lower for a sixth day, during its worst day in six weeks. Whilst both markets shows the potential for further losses, these may not be the ideal levels for bears to enter.

It has been a turbulent 24 hours for markets with Wall Street indices extending losses, dragging AUD/USD and copper prices lower.

Key risk events this week include Jerome Powell’s testimony to the Senate Banking Committee on Tuesday and a CPI report. Should Powell strike a dovish tone and CPI data come in soft, gold, silver and copper could be poised to rally.

Gold and copper were looking good until late Friday, bouncing strongly on Thursday following recent weakness, the former talking out key levels in the process. Then along came the latest US Composite PMI report from S&P Global.

Hang Seng's strong correlation with COMEX copper and SGX iron ore futures over the past month suggests many traders are using it as a mechanism to speculate on the outlook for Chinese industrial activity, especially the housing market.

Given significant uncertainty towards the demand outlook, it may be preferable to let the price action tell us what to do rather than pre-empt on fundamental grounds.

Concerns over China and a hot labour market report in the US caused metals to fall sharply. However, the long-term gold forecast remains positive despite the recent struggles, even if prices were to weaken further in the short-term outlook.

The upside in copper flagged last week has played out nicely, delivering a fresh contract high for the red metal on COMEX futures. However, the price action over the latter parts of this week has not been convincing, warning of growing near-term downside risk.

The stronger US dollar has acted as a handbrake on commodity prices, limiting what may have been otherwise a spectacular rebound to start 2024. Imagine what may happen if the dollar were to break down?

Those considering buying the break may want to look at copper’s lousy track record when it’s been this overbought on the four hourly chart in the past.

Gold, silver and copper all rally as US dollar drops despite hot inflation, with base metals finding additional boost from optimism about Chinese demand. Silver analysis suggests the grey metal could be in for more gains, while gold analysis point to a new record high.

Traders were their most bearish on the US dollar against all currencies in four months, despite the Fed's attempt to push back on multipole rate cuts this year.

AUD/USD could be vulnerable to more selling pressure amidst soft inflation data and ongoing weakness in Copper prices

Welcome to Technical Tuesday, a weekly report where we highlight some of the most interesting markets that will hopefully appease technical analysts and traders alike. In this edition of Technical Tuesday, we will analyse the S&P 500, copper and EUR/USD.

Ahead of key central bank decisions, markets associated with China doing relatively well following news that top leaders in China indicated more support for the real estate sector. We have seen a big move in copper and other metal prices, with crude oil, yuan and Aussie all also pushing higher. So, in this edition of Technical Tuesday we will provide analysis on the AUD/USD outlook, as well as the USD/CNH and copper.

Copper is benefiting from a weaker US dollar and China re-opening