Copper pulled down by strong dollar ahead of Fed meeting

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LONDON, Jan 18 (Reuters) – Copper prices succumbed to dollar pressure on Tuesday as the market priced in a more hawkish tone from the U.S. Federal Reserve ahead of March’s monetary tightening.

The Fed will meet next week after some pretty aggressive comments from officials about how strong they could be in the fight against inflation.

This led to a jump in US Treasury yields that took the dollar index to its highest level in six days and undermined the appeal of dollar-denominated commodities.

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As a result, risk sentiment was weaker, dragging stocks and some commodities lower, Commerzbank analyst Daniel Briesemann said.

“But for the most part, participants are waiting on the sidelines for a clearer statement that the Fed will begin its interest rate hike cycle in March,” he said.

The three-month benchmark copper on the London Metal Exchange (LME) fell 0.7% to $9,662 a tonne at 1735 GMT.

POSITIONING: Speculators are betting on falling prices, as evidenced by a net short position of 12.83% open interest, according to broker Marex estimates. This is its highest since May 2020.

STOCKS: Copper stocks continued to rise, with stocks in LME-registered warehouses climbing 2,000 tonnes to their highest level in two months at 94,525 tonnes.

COPPER EXPORTS: China’s refined copper exports hit a record high in 2021, according to customs data, after international prices encouraged traders to ship metals overseas. Read more

TIN: LME benchmark prices for the metal used in electronics solder hit a record high of $42,335 per tonne, supported by low inventories and steady demand. Later, it rose 1.5% to $42,315.

EUROPE: industry association Eurométaux has called on European policymakers to allow Member States to support national producers of aluminium, zinc and silicon with state aid to guarantee supply of metals essential for the transition towards low-carbon energy.

OTHER METALS: Aluminum on the LME returned above $3,000 a tonne, helped by low inventories and supply risks. It climbed 0.7% to $3,019 a tonne.

Zinc added 1.4% to $3,559, lead was down 1.4% to $2,323 and nickel was up 0.1% to $22,085.

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Reporting by Zandi Shabalala Additional reporting by Eileen Soreng Editing by Barbara Lewis and David Goodman

Our standards: The Thomson Reuters Trust Principles.

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