Checkup with Doctor Copper

Copper prices are fast approaching their 2017 and 2018 lows and risk breaching these technical support levels, as risk sentiment sours. President Trump’s additional tariff announcement last week spooked risk assets, with notable weakness in the RMB. The PBOC has signaled more monetary policy easing is coming, which could be supportive of copper prices. However, the escalation of tariffs is also a political battle, which Governor Yi Gang has suggested could lead to a temporary dislocation in the RMB (see: “Testing China with a policy response”, June 14th). Meanwhile, broad USD strength makes the decision to depreciate the RMB more manageable. In the near term, risks for RMB and copper prices both appear tilted to the downside.




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