Positive economic news from China is bullish for copper, write Fawad Razaqzada.
China’s economy appears on solid footing after a series of stronger economic reports came out today. While U.S. economic reports from today showed weak inflationary pressure, there was good news from China. Chinese stocks, copper prices and the yuan have all responded well to news China’s economy expanded by a better-than-expected margin in the first quarter of this year. Easing concerns over the US-China trade dispute may also be in play. Chinese GDP, retail sales and industrial production all came in at better than expected levels:
- Chinese Industrial production was up 8.5% year-over-year vs. an expectation of 5.6% and 5.3% last
- GDP was up 6.4% for the quarter vs. 6.3% expected
- Retail sales grew 8.7% year-over-year vs. +8.3% expected
In reaction to the above Chinese data, copper prices broke above a short-term corrective trend. The breakout, if sustained, could precede further technical buying given the overall bullish trend with copper holding above its 21-, 50- and 200-day moving averages, and given the higher lows. The base of the breakout was around 294.50, so this level is going to be the key support to watch going forward. The first bullish objective is now this year’s high at 298.50 hit at the end of last month, with 300.00 being the subsequent target.
Source: TradingView and FOREX.com
