COMMODITIES: Copper Trend Condition Remains Bullish, Gold, WTI Rangebound
- After spiking sharply higher yesterday following President Trump’s 50% tariff threat, copper futures have pulled back today, with the red metal currently 2.6% lower on the session at $554/lb.
- Copper remains more than 10% up from yesterday, however, having broken key resistance at $546.15, the Mar 26 high.
- The breach is seen as a key bullish development and reinforces the current primary uptrend. Sights are on a retest of yesterday’s high at $589.55. Clearance of this level would open the $600.00 handle.
- Price action is likely to remain volatile, however. Key short-term support has been defined at $497.25, the Jul 8 low.
- Meanwhile, spot gold has edged up by 0.3% to $3,311/oz, as the yellow metal has struggled for direction today.
- Recent weakness in gold resulted in a breach of the 50-day EMA, and a trendline drawn from the Dec 30 ‘24 low and connected to the Feb 28 low. A clear break of both trend tools would signal scope for a deeper correction, and open $3,245.5, the May 29 low.
- However, the recovery from the Jun 30 low also highlights a possible false trendline break. A resumption of gains would refocus attention on $3,451.3, the Jun 16 high.
- WTI has also been largely rangebound as the market continues to monitor US trade policy and any impact on demand.
- WTI Aug 25 is up 0.1% at $68.4/bbl.
- Support to watch is the 50-day EMA, at $65.22. Initial resistance is at $71.20.
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US TSY OPTIONS: Jul'25 10Y Put Buy
- +10,000 TYN5 108.5 puts, 3 vs. 110-04.5/0.05%
US FISCAL: CBO Estimates Widening Deficit Through May; X-Date Mid-Aug/End-Sept
The Congressional Budget Office (CBO) estimates a federal deficit of $314B in May, which if confirmed in Wednesday's Treasury statement would mean the size of the deficit through the first 8 months of the fiscal year (Oct-Sep) came in at $1.363T. That would maintain the highest running total since this point of 2021, and up over $160B from $1.202T in the same period of the prior fiscal year.
- The CBO makes the point that timing effects actually make this year's deficit look a little worse. Taking into account various shifts, "the deficit so far this fiscal year would have been $84 billion (or 7 percent) more than the shortfall at this point last year".
- But overall, revenues increased by $196B (6%), overrun by outlays rising by $357B (8%). There is also this note re tariffs: "Receipts from other sources rose by $43 billion (or 29 percent) relative to the same period last year. Customs duties increased by $30 billion (or 61 percent)...Excise taxes increased by $11 billion (or 18 percent)."
- The CBO "now estimates that if the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures would probably be exhausted between mid-August and the end of September 2025. That estimated range begins about two weeks later than the agency estimated in
March 2025." - We await Wednesday's official figures to confirm - though CBO was only $2B off April's official figure in their early estimate ($258B surplus vs $256B CBO est).
USDJPY TECHS: Bear Cycle Remains In Play
- RES 4: 150.49 High Apr 2
- RES 3: 149.28 High Apr 3
- RES 2: 147.67/148.65 High May 14 / 12 and a reversal trigger
- RES 1: 145.18/146.28 50-day EMA / High May 29 and key resistance
- PRICE: 144.57 @ 15:57 BST Jun 9
- SUP 1: 142.12 Low May 27 and a key support
- SUP 2: 141.96 76.4% retracement of the Apr 22 - May 12 bull leg
- SUP 3: 139.89 Low Apr 22 and a bear trigger
- SUP 4: 138.82 1.50 proj of the Feb 12 - Mar 11 - 28 price swing
Recent gains in USDJPY are considered corrective and the trend condition remains bearish. Attention is on the next important support at 142.12, the May 27 low. A clear break of this level would confirm a resumption of the bear leg and open 139.89, the Apr 22 low. Moving average studies remain in a clear bear-mode position too, highlighting a dominant downtrend. Key short-term resistance has been defined at 146.28, the May 29 high.
