Copper price remains firmer around $3.45 as DXY retreats, stimulus hopes amplify

• Copper price stays mildly bid for third consecutive day on COMEX.
• Pause in the bond rout, expectations of heavy bond-buying in Japan and the UK favor metal buyers.
• China’s zero covid policy, record credit default swap fail to depress buyers amid softer DXY.

Copper price remain on the buyer’s radar as the red metal rises for the third consecutive day on the COMEX, up 0.70% intraday near $3.45 during early Wednesday morning in Europe.

The industrial metal has recently been cheering the hopes of further stimulus from China, the UK and Japan as these nations try to defend their respective national currencies after the latest blood bath against the US dollar. Also favoring the expectations of additional liquidity are the fears of economic slowdown, recently backed by the International Monetary Fund (IMF).

On Tuesday, the IMF lowered the global economic growth forecast for 2023 to 2.7% from 2.9% estimated in July while citing pressures from high energy and food cost, rate hikes as the key catalysts for the move. It’s worth noting that the Washington-based institute left the 2022 growth forecast unchanged at 3.2% versus 6.0% global growth in 2021." The IMF also cut China's 2022 growth forecast to 3.2% from 3.3% in July; cut its 2023 growth forecast to 4.4% from 4.6%.

Elsewhere, an increase in China’s copper cathode output, by 6.12% MoM and 12.12% YoY in September, joins the all-time high of Beijing’s Credit Default Swaps (CDS) to challenge the copper buyers.

It should be noted that the retreat in the US Treasury yields and a pause in the US Dollar Index (DXY) run-up offer major support to the industrial metal. That said, the DXY retreats from a two-week high while snapping a five-day uptrend, down 0.12% intraday at the latest. Also, the US 30-year Treasury yields remain sidelined near 3.91% after rising to the highest level since 2014 the previous day whereas the US 2-year bond coupons ease to 4.28%, down for the second consecutive day.

Moving on, chatters surrounding the British, Chinese and Japanese governments’ bond-buying, as well as China’s zero-covid policy, may direct short-term copper moves. Also important will be today’s Federal Open Market Committee (FOMC) Meeting Minutes amid hawkish Fed bets.