Iron ore and copper shine as China hints at supercharged stimulus, sparking a metals rally hotter than a blast furnace. With CEWC still ahead, could this be just the start of an electrifying run higher?
By : David Scutt, Market Analyst
China’s Politburo plans “moderately looser” monetary policy and “more” proactive fiscal policy next year, echoing phrases last used during the global financial crisis (GFC). While short on specifics at this point, the explicit signal immediately sets high expectations for measures to boost domestic activity in the months ahead.
Given China’s record stimulus spending during the GFC, only exceeded by pandemic-era measures, it’s no surprise industrial metals like iron ore and copper have surged on the news, especially as no announcement was expected before the Central Economic Work Conference (CEWC) later this week.
The timing of the CEWC, which outlines China’s economic roadmap for the year ahead, means the buzz from the Politburo’s pre-emptive move could keep Chinese markets, including commodities, stocks, and indices, buoyant for days.
Source: TradingView
SGX iron ore closed at two-month highs in overnight trade, breaking above resistance at $106 that had capped gains on several occasions in November and December. The bullish engulfing candle from Monday, combined with bullish signals from MACD and RSI (14) and break above the 200-day moving average, points to the path of least resistance being higher near-term, bringing a potential retest of $109.05 into play. If that were to be taken out, a far tougher test awaits at $114, a level that has successfully repelled bullish probes on three separate occasions since June.
Those considering bullish setups could use $106 for protection, allowing for longs to be established above the figure with a tight stop beneath it or the 200-day moving average for protection.
Click the website link below to get our exclusive Guide to AUD/USD trading in Q4 2024.
cityindex.com
If the RBA is able to stick to its plan and keep monetary policy unchanged, AUD/USD may stick to its bullish seasonal trend in Q4, though volatility could increase.
Source: TradingView
COMEX copper reacted to the stimulus signal from China’s Politburo, breaking the downtrend it had been sitting in since late September before stalling just below the intersection of the 50 and 200-day moving averages.
The 50-day moving average has been highly respected this year outside the messy price action during and immediately after US election day, making it a particular focal point.
While MACD and RSI (14) are generating bullish signals, it would be preferable to see copper break above these moving averages before initiating bullish positions, allowing for traders to place stops beneath for protection against reversal.
Potential trade targets include $4.50 and even $4.79, depending on the scale of stimulus measures announced.
– Written by David Scutt
Follow David on Twitter @scutty
cityindex.com
Iron ore and copper shine as China hints at supercharged stimulus, sparking a metals rally hotter than a blast furnace. With CEWC still ahead, could this be just the start of an electrifying run higher?
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
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By : David Scutt, Market Analyst
- China’s Politburo signals “moderately looser” monetary and more proactive fiscal policy for 2025
- Iron ore surges to two-month highs, breaking resistance at $106.
- Copper breaks its downtrend but stalls at the 50/200-day moving averages
- Eyes on CEWC for further stimulus details, keeping metals buoyant
Overview
China’s Politburo plans “moderately looser” monetary policy and “more” proactive fiscal policy next year, echoing phrases last used during the global financial crisis (GFC). While short on specifics at this point, the explicit signal immediately sets high expectations for measures to boost domestic activity in the months ahead.
Given China’s record stimulus spending during the GFC, only exceeded by pandemic-era measures, it’s no surprise industrial metals like iron ore and copper have surged on the news, especially as no announcement was expected before the Central Economic Work Conference (CEWC) later this week.
The timing of the CEWC, which outlines China’s economic roadmap for the year ahead, means the buzz from the Politburo’s pre-emptive move could keep Chinese markets, including commodities, stocks, and indices, buoyant for days.
Iron ore sending bullish signals
Source: TradingView
SGX iron ore closed at two-month highs in overnight trade, breaking above resistance at $106 that had capped gains on several occasions in November and December. The bullish engulfing candle from Monday, combined with bullish signals from MACD and RSI (14) and break above the 200-day moving average, points to the path of least resistance being higher near-term, bringing a potential retest of $109.05 into play. If that were to be taken out, a far tougher test awaits at $114, a level that has successfully repelled bullish probes on three separate occasions since June.
Those considering bullish setups could use $106 for protection, allowing for longs to be established above the figure with a tight stop beneath it or the 200-day moving average for protection.
Click the website link below to get our exclusive Guide to AUD/USD trading in Q4 2024.
AUD USD Q4 2024 Market Outlook - City Index AU
If the RBA is able to stick to its plan and keep monetary policy unchanged, AUD/USD may stick to its bullish seasonal trend in Q4, though volatility could increase.
Copper set to test key 50DMA
Source: TradingView
COMEX copper reacted to the stimulus signal from China’s Politburo, breaking the downtrend it had been sitting in since late September before stalling just below the intersection of the 50 and 200-day moving averages.
The 50-day moving average has been highly respected this year outside the messy price action during and immediately after US election day, making it a particular focal point.
While MACD and RSI (14) are generating bullish signals, it would be preferable to see copper break above these moving averages before initiating bullish positions, allowing for traders to place stops beneath for protection against reversal.
Potential trade targets include $4.50 and even $4.79, depending on the scale of stimulus measures announced.
– Written by David Scutt
Follow David on Twitter @scutty
Iron Ore, Copper: Sparks fly as China sets stage for super stimulus
Iron ore and copper shine as China hints at supercharged stimulus, sparking a metals rally hotter than a blast furnace. With CEWC still ahead, could this be just the start of an electrifying run higher?
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
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