Copper Prices Decline as Dollar Rises,Pressuring Foreign Holders

12 nov

Copper prices are experiencing a deeper decline, coinciding with the dollar index reaching its highest level since early July. This strong dollar makes metals priced in USD more expensive for international buyers, resulting in increased losses for copper.

The dollar's upward trajectory has been fueled by expectations that President Trump's proposed tariff and tax reforms may keep US interest rates elevated, negatively impacting trading partners, particularly China, which is already facing challenges in revitalizing its economy.

Despite China’s efforts to address concealed debt and inject more stimulus into the economy, these measures have yet to translate into positive market sentiment. Slow corporate borrowing in China is raising concerns about future metals consumption, as noted by Dan Smith, head of research at Amalgamated Metal Trading.

From a technical perspective, a demand zone has been identified around the 4.0625 to 4.000 range. Given the ongoing increase in the dollar index (DXY), this price level may be tested soon. The latest Commitment of Traders (COT) report reveals that 'smart money' is holding long positions, while retail investors are beginning to shift towards shorting.

We are closely monitoring this metal for a potential reaction at the identified demand area. This situation presents a developing narrative worth watching in the copper market.

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