Copper price is down by 4.20% in today’s trading as economic data from China provide a glimpse of the economic impact of the coronavirus pandemic. As of this writing, the metal is trading around 2.3791, down from 2.48384.
Earlier this morning, China’s industrial production report for February printed at -13.5% and sorely missed the -3.0% forecast. To make matters worse, retail sales for the same month showed a contraction of 20.5% in consumer spending. It was expected that only a 4.0% decline would be reflected by the report.
This news was bearish for copper price because China is the largest user of the metal. Therefore, signs of slowdown in the country has an adverse effect on the metal. These reports suggest that it may take a while before the Chinese economy recovers from the perils of the coronavirus. Consequently, it hints that demand for copper will also take a while.
Not even a flood of additional stimulus could boost copper price. Over the weekend, the Federal Reserve cut its benchmark rates to 0.00%. Through its interest rate-decision-making body, the FOMC, the central bank also announced a $700 billion quantitative easing program.
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Copper Price Outlook
On the monthly chart of copper price CFDs, we can see that the metal is testing a critical support level. By connecting the lows of January 2009, January 2016, and August 2016, we can see that it is testing trend line support. If sellers can sustain their momentum and copper price closes at its current levels at 2.3791, the trend line would effectively be invalidated. It could mean a bigger sell-off on copper price, possibly to its 2016 lows at 2.0217.
On the other hand, if buyers can find enough support at this level, we could see a bounce to 2.4995. This price acted as a previous support level and coincides with the falling trend line when you connect the highs of January 16 and March 3.
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