Since June, copper breaks a four-day uptrend to lower its best levels. Negative market sentiment To encourage policy doves, Fed’s Waller underlined the need for additional data. The worry in advance of the meeting between Biden and Xi strengthens the risk aversion. Downward movements are limited by China’s relaxation of COVID rules and assistance for the real estate industry.
Early on Monday morning in Europe, copper prices fell from a five-month high as buyers took a break amid conflicting emotions and a strengthening US dollar.
The Copper Futures on the COMEX fell 1.24% intraday as it reversed from the highest levels since late June to $3.88 at press time, reflecting the mindset of the metal traders. According to Reuters, a three-month Copper contract on the London Metal Exchange (LME) was down 0.4% at $8,453 a tonne as of 05:43 GMT.
Copper started the week off on a high note as it followed China’s weekend remarks indicating a further loosening of the Covid regulations and steps made to soothe the agony of the real estate market with a 16-point plan.
However, negative market sentiment and the price of copper were impacted by remarks made by US Federal Reserve (Fed) Governor Christopher Waller and the International Monetary Fund (IMF).
The dovish bets on the Fed’s subsequent actions were curbed when Fed’s Waller said, “Rates will not decrease unless there is ‘clear, substantial evidence’ inflation is declining.” But the policymaker also suggested that the Fed start thinking about proceeding more slowly. According to Reuters, the IMF, on the other hand, attributed the gloomier picture to tighter monetary policy brought on by persistently high and widespread inflation, China’s sluggish economic momentum, and persisting supply disruptions and food shortages on by Russia’s invasion of Ukraine.
Additionally, fear surrounding the G20 summit in Bali, particularly the meeting between US President Joe Biden and his Chinese counterpart Xi Jinping, puts downward pressure on metal prices. According to Reuters, US President Biden said that the US and China will maintain open lines of communication to avert war, with difficult conversations probably taking place in the coming days. The event is scheduled to start at 09:30 AM GMT.
In a speech at the East Asia Summit in Cambodia, Vice President Joe Biden emphasized the need to maintain peace in the Taiwan Strait and said that the United States would “compete strongly” with Beijing. At the same time, “ensuring competition does not veer into violence.” On Sunday night, he landed in Bali. Similarly, according to Reuters, US Treasury Secretary Janet Yellen said the Biden-Xi meeting was “aimed at stabilizing the United States’ relationship with China, but have been explicit about national security concerns.”
The US market futures record slight losses as the Asia-Pacific equities trade mixed amid these moves. Additionally, the US Treasury rates cause the US Dollar Index (DXY) to rise by as much as 0.32% intraday from a three-month low.
Moving on, with a light schedule, reports from Bali and the Fedspeak will be essential for the metal traders.