LONDON: Copper was little changed on Friday ahead of a key US payrolls report that could boost the dollar, though recent signs of economic improvement in China and the US kept the sell impulse in check.
The dollar edged up from a three-week low as traders expect US payrolls will show employers maintained a solid pace of hiring in December, putting the economy on a path to stronger growth and further interest rate increases.
A stronger dollar makes dollar-priced metals costlier for non-US investors. "The dollar does seem to be moving prices quite a bit this week," said Capital Economics' senior commodities economist Caroline Bain. Investors in copper have grown cautious after prices rose 2.6 percent on Wednesday to their highest since Dec. 16, trying to gauge to what extent the economic recovery in China and the US has been priced in.
"The rally (last year) got ahead of itself. Optimism over China picking up and (US president elect Donald) Trump's infrastructure spend are going to fade (by the second quarter)," said Baine. Three-month copper on the London Metal Exchange was up 0.02 percent at $5,581 a tonne by 1112 GMT. The metal gained 18 percent last year.
A raft of data from China in coming weeks is expected to show the world's top metals consumer carried solid momentum into 2017, thanks to government stimulus and a construction boom that breathed new life into its smokestack industries.
But Beijing's decision to double down on spending to meet its official growth target may have come at a high price, as policymakers will have their hands full in 2017 trying to defuse financial risks created by the explosive growth in debt. In the US, investors have reassessed fiscal stimulus and economic growth expectations, scaling back bets for the number of rate rises this year and pushing the dollar down from this week's 14-year high.
"The start of year rallies in the base metals are not one-way bets, there appears to be some hesitation and resistance into the strength," said William Adams, analyst at FastMarkets.
Zinc dipped 0.4 percent to $2,607 a tonne, after rising 3.9 percent on Wednesday. Prices of the metal used to galvanise steel climbed 60 percent last year.
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