Copper price forecast ahead of Chinese manufacturing PMI data

Copper price is on a consolidation pattern as investors await further cues from various countries’ manufacturing PMIs. At the time of writing, it was down by 0.36% at $4.2765.

Week’s drivers of copper price

On Wednesday, China is set to release its manufacturing PMI, with analysts expecting a reading of 50.8. While the figure will still signal the expansion of the country’s manufacturing sector, it will be lower than May’s 51.0.

If the data comes in lower-than-expected, this will be the third month in a row that the figures have missed the estimates. Notably, China is the leading consumer of copper and other industrial metals. As such, data from its manufacturing sector is crucial in gauging the demand for the red metal and the overall health of the global economy. On Thursday, data from manufacturing sectors in Australia, Japan, Europe, and the US will further define copper price movements.

Copper price is also reacting to President Biden’s bipartisan infrastructure bill. On Thursday, the US president announced that the US Senate has reached a deal for $1.2 trillion on infrastructure spending. While the amount is lower than the initially proposed 42.3 trillion, its approval will boost copper price. This is based on the metal’s extensive use in construction, industrial, and electrical projects. Out of the proposed amount, $579 billion will be in new spending. Investors are now keen on whether the bill will be passed into law.  

Copper price technical outlook

Copper price is on a consolidation pattern after its decline on Friday. At the time of writing, it was down by 0.36% at 4.2765. In the previous session, it hit an intraday high of 4.3370. After rebounding from its two-month low of 4.0885 last Monday, the red metal rebounded but lost its upward momentum mid-week. On a three-hour chart, it is trading slightly below the 25 and 50-day EMA, which have converged at around 4.2835.

I expect copper price to continue consolidating as investors await further cues from the manufacturing PMI data scheduled for the current week. In the near term, it is likely to trade within a tight range of between the current support level of 4.2500 and Friday’s high of 4.3370. A move past the horizontal channel’s upper border will clear the path towards the next target at 4.4405. On the flip side, a move below the channel’s lower border will place the next support level at 4.2015.