When Dr Copper goes down, it is usually not a good sign. The metal has slumped around 3% today on the back of fears about an economic slowdown amid soaring prices levels around the world and the Fed’s insistence on creating a soft landing in the US economy by continuing its aggressive rate increases.
The metal has fallen sharply today and is currently displaying a bearish engulfing candle on the daily chart, which suggests that the previous buying momentum has now ended and that more losses could be on the way:
Recession fears intensified this morning as European traders were presented with even more disappointing data while they saw oil prices rise further on the back of OPEC’s decision to cut output aggressively. As they assessed the data and the impact of the renewed rise in oil prices on inflation, they sold European stocks and euro in favour of the US dollar. The selling pressure intensified during the first half of NY session, leading to a broad-based selling of risk assets, including copper.
We saw the latest Eurozone retail sales slump 2% year-over-year while German industrial orders fell 2.4%. Both of these figures are consistent with other European number and point to weakness in demand, and underline expectations of a looming recession in the coming quarters. The energy price shock created by the Russian invasion of Ukraine continues to be the main driver behind the economic slump in the Euro area.
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