SINGAPORE: London copper prices fell on Friday, on track for its biggest weekly drop since mid-August as the U.S. dollar strengthened and on lingering concerns about the trade war between the U.S. and China, the world's biggest copper consumer.
The dollar gained versus the euro and sterling on Friday as the U.S. Federal Reserve kept interest rates steady but reaffirmed its monetary tightening stance, setting the stage for a rate hike in December.
"FOMC meeting was disappointing if you were looking for something to cause dollar's weakness," said Guy Wolf, global head of market analytics at Marex Spectron.
The stronger greenback makes dollar-denominated metal purchase more expensive for buyers paying in other currencies.
While fundamentals had been supporting copper prices, U.S.-China trade tensions have been capping gains in the metal used in power and construction. Copper hit a 4-1/2-year high in June.
"We continue to see a dislocation between fundamentals and investor sentiment in the copper market. Concerns of weaker demand amid escalating trade tension remain a significant headwind," ANZ said in a note.
* COPPER: Three-month copper on the London Metal Exchange dropped 1.45 percent to $6,066 a tonne by 0752 GMT, poised for its biggest weekly loss since the week ending Aug. 17 with a decline of 3.4 percent. The most-active copper contract on the Shanghai Futures Exchange ended down 0.6 percent to 49,180 yuan ($7,080.13) a tonne.
* U.S. RATE: The Fed held interest rates steady on Thursday but remained on track to keep gradually tightening borrowing costs, as it pointed to a healthy economy that was marred only by a dip in the growth of business investment.
* CHINA DATA: China, which consumes nearly half the world's copper, registered a 19 percent month-on-month fall in copper imports in October, but that was a jump of 28 percent from the same time last year, data showed.
* WAITING: "Base metals are almost waiting for a sign that something's changed, whether it'd be the Chinese economic momentum or the U.S. policy direction. Until we get that sign, it's very difficult to think you can have a sustainable rally, which is why we sort of up one day down the next," Wolf said.
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