Copper prices have been on a tear higher since the spring of last year. The hopes of a global recovery on a vaccine rollout have been underpinning these strong gains. If Dr Copper had to give its verdict on the global recovery, it would have said that better times are ahead!
However, the recent falls in equity markets have some investors worried. Has the sharp rise in equities in commodities now been too far, too fast? Furthermore, the huge rise in US CPI yesterday sent the USD racing higher, US 10 year yields higher, and Eurodollar futures lower, as earlier Fed rate hikes were anticipated. This should weigh on copper prices. Furthermore, over the last 15 years, Copper has had a seasonally weak period. If this repeats itself again, and equity markets sell off on risk-off tones, the copper downside could accelerate.
Should you sell copper on risk-off tones?
Major Trade Risks: The main risk to this trade is from any risk-on tones which will fit copper prices higher.