LONDON: Copper prices eased on Wednesday as the dollar strengthened ahead of US jobs data later in the week which is expected to give more direction on the timing of stimulus tapering.
Market watchers will look for signs that the U.S Federal Reserve will pull back its support for the world’s largest economy, which was battered by COVID-19. Tapering has implications for liquidity in financial markets.
The dollar gave up gains on Wednesday after US private payrolls increased far less than expected in July, stoking fears for a weak reading in Friday’s wider jobs figures.
“Copper is trading in a narrow range with not much direction. The market is waiting for a clearer signal from non-farm payrolls on Friday,” said ING analyst Wenyu Yao.
Benchmark copper on the London Metal Exchange shed 0.9% to $9,459 per tonne by 1600 GMT, after trading marginally higher.
The dollar’s recovery made greenback-priced metals more expensive for holders of other currencies, denting their appeal.
Meanwhile, concerns about rising cases of the Delta variant of COVID-19 dampened the demand outlook especially in China which consumes half of global copper supplies.
SERVICES: Growth in China’s services sector accelerated in July to the highest since May, a private survey showed on Wednesday, pointing to a steady recovery in the world’s second largest economy.
STIMULUS: China may need more monetary and fiscal easing to halt an economic slowdown in the wake of torrential rains and flooding, and authorities’ tough response to outbreaks of the highly-transmissible coronavirus Delta variant, economists say.
CHINA DEMAND: The Yangshan premium, a closely watched indicator of import demand in China, climbed to its highest since April at $53 a tonne.
SUPPLY: Top copper miner Codelco’s June output rose 14.9% year-on-year to 151,600 tonnes, while production at the world’s biggest copper mine Escondida fell 21.6% in the same period.
OTHER METALS: Aluminium shed 0.7% to $2,567 a tonne, zinc was flat at $2,969, lead was off 1% to $2,375, tin was steady at $34,630 and nickel was up 0.7% to $19,249.