Copper ticks up as Fed rate hike bets cool
CPER•Three-month copper rose 0.31% to $14,302 a metric ton as cooling expectations for a U.S. Federal Reserve rate hike outweighed pressure from a stronger dollar. Traders priced an 18% chance of an October hike, down from 71% a week earlier.
1. Copper gains
Copper nudged higher on Monday, supported by gains in equity markets and an improving demand outlook. Sandeep Daga of Metal Intelligence Centre said the metal was helped by an uptick in equities as the chance of an October U.S. Federal Reserve rate hike dimmed.
2. Rate outlook shifts
Rate traders priced an 18% chance of an October hike, down from 71% a week earlier, after U.S. jobs data came in weaker than expected. Higher interest rates can dampen economic activity and weigh on demand for industrial metals such as copper.
3. Dollar and China in focus
The U.S. dollar rose 0.36% to a near 17-month high, which can make dollar-denominated commodities more expensive for buyers using other currencies. The market was watching for China’s return as a buyer; Daga said stocks there were thin, smelter maintenance suspensions were lined up, and domestic demand appeared weak.
