This week, the US administration escalated its trade fight with China by imposing tariffs worth more than $200 billion. China responded by placing tariffs worth $60 billion. To free traders, this was a bad week because increased tariffs reduces the amount of trade between the two countries. Also, the tariffs will not help the US administration achieve the goals of reducing the deficit and removing the barriers that American companies face in China.
After the tariffs were announced, the market was happy, with US markets reaching an all-time high. This was mostly because the tariffs were lower than what traders were expecting.
Another big winner was copper. Copper is often called the barometer of the global economy because of how important it is in the manufacture of basic products like electrical wires. The increase in trade leads to more demand of copper-made products. The prices usually rise with the demand. Therefore, the tariffs that were announced meant that more demand could come. This was further supported by a lower dollar. In the past two months, the dollar strength that was experienced early this year eased. It has weakened against the key currencies.
The price of copper reached a weekly high of $2.77, which was in the upper band of the Bollinger Bands. As shown below, the price has found a bottom at the $2.5 level. This is an indication that the price could continue moving up, potentially to the $3 level.
