Copper readies as fundamentals set the pace ahead of Fed

September, just like a typical Monday, is often approached with minimal enthusiasm in financial markets. However, Dr Copper appears to be brightening the space amid a weaker US dollar and steady appetite from China. Investors are now keen on the upcoming inflation figures for clarity on the health of the global economy and the Fed’s positioning.

Notably, COMEX copper price edged higher on Monday as the markets await August’s CPI data from the world’s top economies - the US and China. At the time of writing, the red metal was trading at $4.56; hovering around the support zone of $4.55 a pound.

Economic barometer rises ahead of US, China CPI

Copper price performance often mirrors the global economic health based on its vast uses in construction as well as industrial and electrical works. On the one hand, tariff-driven uncertainties continue to weigh on the red metal. However, a decline in inventories, coupled with optimism over China’s steady consumption, has investors cautiously bullish. 

The daily exchange data showed LME stocks drop by 2,125 tonnes to stand at 155,825 tonnes. At the same time, the Chinese imports of copper concentrates rose to its highest in four months at 2.76 million tonnes. The leading consumer also had its August imports of unwrought copper surge more than a year earlier at 425,000 tonnes. 

In the ensuing sessions, investors will be eyeing consumer price data from the two leading economies - the US and China. On Thursday, the US Bureau of Labour Statistics is set to release August’s CPI. Analysts expect it to have increased by 2.9% YoY compared to the previous month’s 2.7%. 

The inflation data comes amid heightened concerns over the impact of Trump’s aggressive tariffs. Indeed, August’s figures will likely indicate that the inflation pressures are enough to fuel the Fed’s monetary policy easing. The latest US labour report pointed at a stalling jobs market as manufacturing jobs dropped for the fourth consecutive month.   

The expectations of a dovish Fed have seen the benchmark 10-year Treasury yields plunge to a 5-month low of 4.04%. The decline has impacted the US dollar; making copper less expensive for buyers holding foreign currencies. At the time of writing, the dollar index was hovering around the 6-week low hit on Friday.  

In addition to the US figures, China’s CPI numbers are due for release on Wednesday. Analysts expect prices to have eased by 0.2% as the economy steadies in its recovery.  

COMEX copper price technical analysis

COMEX copper futures were hovering around $4.55 a pound on Monday after a weekly loss at the start of September. As observed on its daily chart, it remains below the short-term 25-day EMA after the bulls lacked enough momentum to break the resistance at $4.65. 

Notably, the selling pressure persists as the bearish death cross pattern remains in place. However, the month-long bullish trendline points to further rebounding in the near term.

Copper price will likely hold steady above the support zone of $4.55 as the bulls make another attempt at breaking the resistance at $4.65. A move past that range will likely curb the gains at $4.70. On the flip side, a move below $4.50 will invalidate this cautious bullish thesis.