COPPER TECHS: (U5) Sights Are On The $600.00 Handle
- RES 4: $634.95 - 2.000 proj of the Apr 7 - 23 - May 9 price swing
- RES 3: $613.49 - 1.764 proj of the Apr 7 - 23 - May 9 price swing
- RES 2: $600.00 - Psychological round number
- RES 1: $595.85 - High Jul 24
- PRICE: $577.90 @ 14:34 BST Jul 25
- SUP 1: $542.50/497.25 - Low Jul 9 / 8 and a key short-term support
- SUP 2: $476.40 - Low Jun 13
- SUP 3: $453.05 - Low May 9
- SUP 4: $411.75 - Low Apr 7 and the bear trigger
Copper futures remain bullish and have traded higher this week. The contract rallied sharply higher on Jul 8 resulting in a break of resistance at $546.15, the Mar 26 high. The breach is seen as a key bullish development and reinforces the uptrend. Sights are on $589.55, the Jul 8 high. It has been pierced, a clear break would open $600.00. Key short-term support lies at $497.25, the Jul 8 low.
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SONIA: Medium-Term Dovish Catalyst Likely Needed To Push SFIZ5/Z6 Notably Lower
The SFIZ5/Z6 spread hovers above year-to-date lows (-21.0 vs. -23.0).
- It seems that the market needs a fresh medium-term dovish catalyst to drive the spread significantly lower.
- The BoE’s current guidance continues to point towards quarterly rate cuts through year-end.
- Our baseline view looks for cuts at both the August and November meetings.
- What could push the SFIZ5/Z6 spread lower?
- While the 6-3 vote split at the most recent MPC decision was dovish when compared to the 7-2 market baseline heading in, Deputy Governor Ramsden’s choice to join the dovish camp was within the list of viable outcomes.
- The market needs to see more before committing to pricing deeper easing.
- The most obvious driver would be a continued deterioration in the labour market, resulting in lower wage growth.
- This could then feed into a more benign inflation backdrop than the BoE currently expects.
- However, there are some risks to this idea, even if the data evolves in that manner.
- A rapid deterioration in the labour market could result in frontloading of rate cuts, making for limited or even hawkish impact on this spread if the cutting cycle comes to an end before the turn of the year (the MaPS survey points to a 3.50% neutral rate vs. the prevailing 4.25%).
- What’s more, geopolitical risks and U.S. tariff policy present notable medium-term externalities at present, providing a limitation when it comes to pricing a deeper cutting cycle in ’26.
- These factors also feed into the broader sense of macro uncertainty, making it hard to form a view beyond the next few months.
EQUITIES: US Cash Opening calls
- SPX: 6,111.8 (+0.3%).
- DJIA: 43,130 (+0.1%/+41pts).
- NDX: 22,316.5 (+0.6%).
EQUITY TECHS: E-MINI S&P: (U5) Northbound
- RES 4: 6249.00 High Feb 21
- RES 3: 6200.00 1.50 proj of the Apr 7 - 10 - 21 price swing
- RES 2: 6172.50 High Feb 24
- RES 1: 6157.75 Intraday high
- PRICE: 6147.00 @ 07:25 BST Jun 25
- SUP 1: 5959.00/5922.67 Low Jun 23 / 50-day EMA
- SUP 2: 5811.50 Low May 23
- SUP 3: 5645.75 Low May 7
- SUP 4: 5500.00 Low Apr 30
The trend condition in S&P E-Minis is unchanged, it remains bullish and this week’s fresh cycle high reinforces current conditions. Short-term resistance and a bull trigger at 6128.75, the Jun 11 high, has been breached. The clear break confirms a resumption of the uptrend that started Apr 7. Sights are on the 6200.00 handle, a Fibonacci projection. Key support remains at the 50-day EMA - at 5922.67. A clear break of it would signal a reversal.
