METALS: Copper(HGH6) - Breaks Above $535, Looking to Build Momentum Higher
The range overnight for the HGH6 contract was $527.55 - $543.70, Asia is currently trading around $540.90, +0.35%. Copper has broken above $535 which has been the top of the range for the last 2 months. The surge in risk sentiment, a weaker USD and the news that both Copper and Silver have been added to the US “Critical Minerals” list has contributed to it accelerating higher. Add to this mix a structural supply gap and Copper feels like it is about to start another leg higher. When markets move like this, it's tough to fight it. The first target is towards the $560-$580 area.
- The LME cash market closed overnight around 11575.88
- The Copper(HGH6) Average True Range for the last 10 Trading days: $9.9
- Mr.Uppy posted on X, “A six-month, ~60 percent surge in COPX is what it looks like when the market begins to recognize a structural supply gap. Copper miners are effectively a leveraged expression of the energy transition, infrastructure renewal, and rising global metal intensity. The trend speaks for itself.”
- Bloomberg reported, “Chinese copper smelters are in a stalemate with Antofagasta over processing fees, people familiar said. Talks stalled as tight metal concentrate supply pushed treatment and refining charges below zero.”
- Goldman’s seem to disagree, “(Bloomberg) -- Copper will struggle to sustain its advance above $11,000/ton in the coming year due to ample supply, according to a note from Goldman Sachs. The recent “breakout” of prices won’t last, as most of the gains have been driven by expectations of future tightness rather than fundamentals.”
Fig 1 : Copper(HGZ5) Hourly Chart
Source: MNI - Market News/Bloomberg
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CRYPTO: Bitcoin - Falls Back Toward Support, Demand Returns Around $105k
Bitcoin had a range overnight of $105 299k - $108 301k, Asia is currently trading around $107 100k, +0.25%. Bitcoin took another leg lower yesterday as the Crypto space seems to be struggling with a resurgent Dollar. It has never quite recovered from its crash on 10th & 11th October in what was described as the worst liquidation event in Crypto history after dropping almost 15%. The Bitcoin support area is between $95k-$108k and should provide those wanting to express a long a good opportunity to fade. A break below $90k-$95k is needed to signal a deeper correction is potentially underway, this scenario would make a few of those treasury companies holding bitcoin on their balance sheet nervous.
- Bloomberg is reporting that “without a clear macro anchor, liquidity still fragile and ETF inflows slowing, a break below $100,000 is a clear risk, one that could force the market to look for a new floor.”
Fig 1: Bitcoin spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
STIR: No Chance Of A Cut Today But Market Still Looks Expensive Longer-Term
Going into today’s RBA policy decision, RBA-dated OIS pricing implies almost no chance of an easing, with just a 3% probability assigned.
- As it currently stands, the OIS market has only a 75% chance of a 25bp cut by mid-2026.
- However, that may still be too aggressive as rising annual inflation tends to end easing cycles.
Figure 1: RBA-Dated OIS – Current Vs. Yesterday
Source: Bloomberg Finance LP / MNI
CHINA: Bond Futures Lower on Further Liquidity Withdrawal
- The relationship between liquidity withdrawal / injection and the direction of the bond market seems reasonably certain.
- A second day of withdrawals sees bond futures weaker, albeit marginally.
- The 10-Yr is lower by -0.03 at 108.62, maintaining it's position above all major moving averages as it veers away from being overbought on the 14-day Relative Strength Index.
- The 2-Yr is lower by -0.01 at 102.49 as it nears the 200-day EMA of 102.47 and continues to move below being overbought on the 14-day Relative Strength Index.
- The 10-Yr CGB is steady at 1.79%, looking to establish a new range below 1.80%
