Crypto

Copper under pressure as China fears rise

Copper under pressure as China fears rise

First, the yuan fell, and now copper has lost ground gained earlier in Friday’s session. Oil prices also retreated from previous highs. Will there be more clues? Some of these markets will suffer losses due to growing fears about China.

So far, we’ve seen communities shut down as Covid cases hit an all-time high. The situation is getting worse and people don’t want to be offside as the weekend is fast approaching. Given the pace of the aggravation of the situation in China, I expect to see tightening of restrictions. Obviously, this could hurt economic activity, which is why we see some markets react in this way.

The sell-off of the yuan in the foreign exchange market was also partly triggered by news that the NBK decided to lower the reserve requirement for banks by 25 basis points.

But keep an eye on other markets, especially oil and copper, as the world’s second largest may be forced to further tighten its Covid restrictions. The number of cases has risen to levels last seen in April, when a strict lockdown was imposed in Shanghai. While China has eased some restrictions, its zero-covid policy means there is a threat of new growth restrictions. This will weaken the yuan in the foreign exchange market and potentially jeopardize assets across the board.

The bearish reversal in copper helped form an inverted (incomplete) hammer on the daily chart that appears after several days of relative strength. With the rally fully reversed last week as sellers defended the 200-day moving average and key resistance near 3.9300 at 4.000, the long-term path of least resistance remains down. So see below.

Source: TradingView, StoneX.

Text: Fawad Razaqzada, FOREX.com » Official site

forex.com stock exchange FOMC

Disclaimer: The information and opinions contained in this report are for general information only and do not constitute an offer or solicitation to buy or sell any currency contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not warrant its accuracy or completeness and shall not be liable for any direct, indirect or consequential damages that may result from anyone relying on such information.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker.