Global Commodities: Tariff shockwaves churn crude and copper markets
At a Glance
The desk interprets the latest developments in global tariffs and trade negotiations as pivotal factors impacting crude and copper markets, potentially affecting currencies dependent on these commodities. Per the full note from J.P. Morgan, the Trump administration’s warnings regarding penalties for countries like India and China over Russian oil purchases signal heightened tensions in commodity pricing structures. Additionally, the exemption of refined copper cathode from Section 232 duties has introduced unexpected volatility in the copper market, suggesting further price instability ahead as negotiations evolve. As the landscape shifts, traders should closely monitor these developments for signs of broader currency movement, particularly in commodities-sensitive pairs.
Key Takeaways
- 01Tariff negotiations are causing significant shifts in commodity markets, impacting related currencies.
- 02The exemption of refined copper from tariffs is likely to create further price volatility in the copper market.
- 03Traders should be aware of increased tensions affecting oil purchases from Russia by key nations.
- 04Market participants are advised to remain vigilant regarding how these shifts might influence commodity-linked currency pairs.
Full Analysis
What the desk is arguing
The desk contends that the current tariff and trade landscape is driving meaningful fluctuations in commodity prices, particularly for crude oil and copper. According to J.P. Morgan, the administration's threats against India and China for their reliance on Russian oil could lead to substantial price adjustments across the commodities spectrum, particularly impacting local currencies used in these transactions.
Moreover, the recent decision to exempt refined copper cathodes from import duties is set to disrupt the copper market severely. This unexpected policy shift suggests that traders should brace for further volatility, with copper prices potentially facing upward pressure if demand remains robust amidst supply concerns.
Where it sits in our coverage
The current consensus target for commodities-linked currencies suggests a range in the near term, with jpmorgan targeting 1.10 and bofa at 1.04 for March 2026. This reflects a divergence on the impact of tariffs on trade, with J.P. Morgan's outlook positioned towards the upper bound of the consensus range.
How other firms see it
Aligned firms generally view the impact of commodity tariffs as significant, with jpmorgan and others predicting strength in commodity-linked currencies. Conversely, bofa holds a more cautious stance regarding the potential repercussions, suggesting limited upside from current price levels based on their forecasts.
In this dynamic context, monitoring the correlations between commodities like copper and the USD/CAD currency pair will provide valuable insights as trade negotiations progress. Traders focused on these relevant markets should also consider the broader implications of U.S. foreign policy and commodity pricing for their positions.
Market Implications
Traders should focus on the USD/CAD pair as a key indicator of market sentiment following tariff announcements. A breach above 1.10 may signal stronger commodity demand while a retreat could suggest diminishing investor confidence in crude and copper pricing.
From the original
Trade negotiations and tariffs continue to roil commodity markets with the Trump administration warning that India and China will face penalties due to their ongoing purchases of Russian oil while also shocking the copper market this week by exempting refined copper cathode from
Related speeches
4 itemsWhat’s next for US copper import tariffs
The upcoming US decision on copper import tariffs is poised to significantly affect the copper market, with the Commerce Secretary's recommendation expected by June 30. Per the full note from ing-think, the market has already reacted, reflected in the widening COMEX-LME spread, which now stands at approximately $400 per ton, indicating substantial tariff risk pricing. The positioning around copper is currently robust due to factors like tight supply chains and heightened demand driven by AI technology, supporting copper's resiliency despite broader economic pressures. Traders should remain attuned to copper price movements, particularly as they align with macroeconomic indicators and geopolitical tensions.
Global Commodities: Supply disruptions give copper prices breakout velocity
The desk highlights a bullish outlook on copper prices, driven by an unexpected supply disruption at Freeport's Grasberg mine in Indonesia which is set to tighten the copper market significantly. Per the full note from J.P. Morgan Global Research, this disruption has led to a recalibration of their supply and demand balance, projecting deficits not just for this year but extending into 2026. This development aligns with the desk's broader assessment of commodities under strain and suggests a potential price target nearing $11,250/mt as fundamentals become more constrained, indicating robust future performance. Moving forward, traders should remain vigilant given current dynamics and assess positioning in related commodities.
More from JPMORGAN GLOBAL RESEARCH
5 items- JPMORGAN GLOBAL RESEARCH
EM Fixed Income: Carry on, notwithstanding core market shifts
- JPMORGAN GLOBAL RESEARCH
US Rates: See you next (fiscal) year
- JPMORGAN GLOBAL RESEARCH
Global Commodities: From chokepoints to checkbooks
- JPMORGAN GLOBAL RESEARCH
US Rates - “Truth” and consequences: The impact of President Trump's Truth Social posts on interest rate markets