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Copper in freefall today

Four markets in focus today: High grade copper, AUD/USD, Lean hogs and NZD/USD.

High Grade Copper

Iron ore stabilised overnight at $104.9p/t, however the story of the night was the moves in copper. High grade copper has fallen just over 3% from the ASX 200 cash close and looks vulnerable to further falls. There is much speculation and rumour as to exactly what is going on in the space, with talk of further defaults in the corporate bond space and banks cutting back on the use of commodities as collateral for loans, however right now copper (and iron ore) are right in the market’s sights and sentiment is clearly bearish.

AUD/USD

The AUD finally succumbed to weakness in copper and iron ore; pushing back convincingly below the 90 handle. The key support now seen is at 0.8952, so we may see the bulls defend this level, while a break would certainly be taken negatively. Trading AUD/USD right now is tough; last week we saw a bullish breakout and this week price action is looking negative again, with the fundamentals turning progressively bearish. At 10:30 AEDT we get Westpac consumer confidence, while an hour later we get home loan and investment lending data.

Lean hogs (April)

Lean hogs is moving at a rate of knots and while this commodity rarely makes it onto traders’ radar, it’s worth highlighting that hog prices are up 30% for the year. The trend has basically been one-way, however this is a very mature trend and looking fairly vulnerable, so if long keep an eye on price and perhaps tighten stops. The 14-day RSI is significantly overbought at 90, while the more sensitive 9-day RSI is at 93, so while this highlights the strength of the price change it is also due some consolidation.

NZD/USD

The RBNZ will in focus tomorrow at 07:00 AEDT and the swaps market is placing a 98% probability the RBNZ hike rates, with all economists surveyed on Bloomberg backing this up. What’s also important is the fact that the market has also priced in over five hikes over the coming twelve months which simply looks too hawkish. If the RBNZ give the impression that we are unlikely to see such aggressive action the NZD could sell off despite rates being put up.

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