COPPER TECHS: (H5) Outlook Remains Bullish
- RES 4: $479.00 - High Sep 30 and a bull trigger
- RES 3: $469.30 - High Oct 3
- RES 2: $452.85 - High Nov 5 and a key resistance
- RES 1: $447.00 - High Jan 17
- PRICE: $436.85 @ 14:26 GMT Feb 5
- SUP 1: $418.35/400.50 - Low Feb 3 / Low Jan 2 and a bear trigger
- SUP 2: $395.62 - 1.236 proj of the Sep 30 - Oct 17 - Nov 5 swing
- SUP 3: $388.86 - 1.382 proj of the Sep 30 - Oct 17 - Nov 5 swing
- SUP 4: $377.94 - 1.618 proj of the Sep 30 - Oct 17 - Nov 5 swing
Copper futures remain in a bull cycle, and the latest move down appears to have been a correction. Price has pierced but continues to trade above the 50-day EMA, at 426.20. Recent gains have resulted in a move through 433.50, the Dec 12 high. The break of this level highlights a reversal and opens 452.85, the Nov 5 ‘24 high and a key resistance. On the downside, a stronger sell-off would open €400.50, Jan 2 low.
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GILTS: Marginal Outperformance Vs. Peers
Gilts unwilling to fade the London morning recovery at this stage, even as peers sell off again, leaving yields little changed to 1bp higher across the curve.
- Building $IG slate and Trump’s pushback against media reports pointing to a softer tariff approach helps Tsys away from highs, while Bunds are pressured by German CPI.
- 10-Year gilts 1bp tighter vs. Tsys on the day.
- Meanwhile, UK paper also outperforms Bunds by ~1bp, spread failed to break below 215bp on an earlier test, having not closed below that level since December 9.
- Futures -15 at 92.08, bearish technicals intact. Initial support and resistance 91.64/92.88.
- GBP725mln of medium-term APF sales due from the BoE in ~10 minutes.
CANADA DATA: Highest PMI Service Price Inflation Since May Despite Soft Demand
- The S&P Global Canada services PMI fell to 48.2 in December from 51.2 in Nov, implying its services economy contracted for the first time in three months.
- The press release shows a contrast between subdued demand and notably intensifying price pressures:
- "Canada’s services economy contracted for the first time in three months at the end of 2024. Market demand was reported to be subdued, with the downturn in the sector worsened by postal strikes. Firms nonetheless continued to fill long-held vacancies at their units, which meant that backlogs of work declined sharply. Cost pressures meanwhile intensified amid reports of higher wage bills. Output charges were raised in response to the greatest degree since May."
CROSS ASSET: Trump Denies Watering Down Of Tariffs, USD Bid, Stocks & Bons Sold
Some of the late London morning moves reverse as Donald Trump posts the following on Truth Social: "The story in the Washington Post, quoting so-called anonymous sources, which don't exist, incorrectly states that my tariff policy will be pared back. That is wrong. The Washington Post knows it's wrong. It's just another example of Fake News."
- The BBDXY recovers just over 50% of the losses seen following the Washington Post Story.
- Tsy yields now flat to 2bp higher on the day, curve steeper.
- Euro Stoxx 50 futures pare nearly all of their Washington Post-inspired rally before stabilising.
