On the macroeconomic front the trade dispute between the US and China still weighs with the president of the White House Trump positive about the upcoming negotiations between the two countries, which will resume this week, on Thursday and Friday (10-11 October). In his opinion, there is the probability of arriving at something very significant during the negotiations, although it would be preferable that a possible agreement with China was not partial. It will therefore be appropriate to monitor the situation on this front, as the American president is an unpredictable person.
The US economic data are generally positive, which softens the fears over the holding of the US economy. The drop in the unemployment rate was very positive, updating the minimums for 50 years, against a stable participation rate. The negative note is represented by wage growth, which slowed dramatically, going from 3.2% yoy to 2.9%. An aspect that in fact would open the door to an action of the Federal Reserve for a cut in interest rates at the end of October.
On the technical side, by analyzing copper on a weekly basis, prices are close to important medium-long term support levels. In fact its own area 5500 $ -5600 $ has hindered further attempts to lower prices. This price level is of fundamental importance for two reasons:
1 – It’s a transit area of the uptrendline started from the lows of 2016;
2 – It’s the 61.8% of FIbonacci retracement;
The view is reinforced by the positive divergence of the “MACD” indicator, which suggests a slowdown in the valid descent from the 2018 highs.
In this context, it will also be essential to monitor the strength of the dollar (dollar index – a measure of the value of the US dollar in relation to a basket of foreign currencies), which currently stands near the period highs (99-100 points). However, after a rising from the 2018 lows (+11%) it will be possibile to see a first weakness movement that could benefit the commodities sector.
So it’s importante to observe the first important levels in the $5600-$5500 area. The first confirmations of new bullish signals (in the medium term) are fixed in the $5900-$6000 zone.
COPPER 3 MONTH $ WEEKLY