Metals used in construction are among the top performers today, building on rallies since the start of the month.
Base metals are one of the best indicators of global economic strength and they are clearly improving due to US and Chinese stimulus, along with stability in Europe.
Copper has broken downtrend resistance and could rally another 8-9% before hitting any significant resistance.
My suspicion was that gains were due to a weaker dollar but that’s not the case.
Looking at copper priced in yen, the chart looks even more bullish with a double bottom that targets the April/May high.
And it’s not just copper, aluminum and nickel are sending the same bullish signals. Together, they point to a broad rebound in global growth that will boost commodity currencies and risk trades.
One small caveat may be EUR-priced charts. Looking at aluminum priced in euros, the is a sizable recent rally but it has yet to break out. If the pace of metals gains continues to outpace even the euro, it could point to significant gains ahead.
Of course, the main risk is the Fed but so long as the Fed doesn’t massively disappoint, I believe we could be on the verge of a major rally in risk.
