Upbeat China Manufacturing PMI data for June 2020, which indicates a slight improvement in factory activity, is giving copper prices a boost this Tuesday. Copper price on the XCUUSD daily chart has shot up by 1.16% on the day to trade at 2.7105, just shy of the major resistance zone.
Data from the China Federation of Logistics and Purchasing (CFLP) indicates that the China Manufacturing PMI data came in at 50.9, which was better than last month’s reading of 50.6 and also better than the 50.4 mark that markets were expecting. Services PMI also improved to 54.4, which was better than last month’s 53.6 and the consensus of 53.3.
China is the largest importer of copper in the world, as it needs the raw material to feed its industries. Copper price is a function of demand from China and is therefore seen as a tradable proxy for business conditions in the manufacturing sector. This is why copper prices were on bid today.
Outlook for Copper Price
Copper price has now approached the major resistance zone which has 2.7490 as the ceiling. This zone is the area to beat for buyers, and a break above this zone continues the recovery of copper from the march 2020 coronavirus-induced lows. 2.7695 a d 2.8020 are the immediate upside targets, with January’s peak at 2.8695 remaining relevant, even though there has to be strong demand recovery for that price level to become a realistic target.
On the flip side, a rejection at the resistance zone allows for a retest of the 2.6860 support, with 2.6020 and 2.5535 being the nearest downside targets. Further decline towards 2.4485 requires a worsening of fundamentals from China with the attendant risk-off sentiment.
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Copper Price Chart (daily)
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