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Strengthening dollar curbs Copper rebound

Kitco News

(Updates throughout, moves dateline from BEIJING)

By Peter Hobson

LONDON, Jan 10 (Reuters) - Copper was set for close to a 1% weekly gain on Friday as fears of conflict in the Middle East diminished and exchange inventories continued to dwindle, though prices were kept in check by a stronger dollar.

Benchmark copper on the London Metal Exchange (LME) was up $2 at $6,182 a tonne by 1152 GMT for a 0.9% rise this week. It had dropped 1.4% the previous week after a U.S. air strike killed an Iranian commander and Iran threatened revenge.

“After the Iran issue calmed down, investors’ risk appetite returned to copper,” said ING analyst Wenyu Yao.

“Inventory has been drawn down, supporting prices, but the upside momentum is weakened by a strengthening dollar.”

The dollar is up 0.7% against a basket of major currencies this week, making metals priced in the greenback more expensive for buyers with other currencies and potentially weakening demand.

EQUITIES MARKETS: Global shares set record highs on Friday as investors cheered an apparent de-escalation in U.S.-Iran tensions and looked instead to prospects of improved economic growth.

YUAN: The U.S. dollar is likely to remain strong this year, while China’s currency will weaken slightly, Reuters polling of FX strategists found. China is the biggest consumer of metals.

TRADE: U.S. President Donald Trump, who last month announced that a Phase 1 trade deal with China would be signed on Jan. 15, said on Thursday that the agreement could be signed “shortly thereafter”.

PAYROLLS: U.S. job growth is likely to have slowed in December, but the pace of hiring probably remains sufficient to continue the longest economic expansion in history despite a deepening downturn in manufacturing.

FEDERAL RESERVE: Officials from the U.S. central bank said the economy may have weathered the worst, with risks beginning to ease and businesses adjusting to a new trade environment.

JAPAN: Core machinery orders in Japan are likely to have risen in November after four months of decline, a Reuters poll showed.

COPPER STOCKS: Headline inventories in LME-registered warehouses fell by 3,100 tonnes to 132,725 tonnes, down from nearly 340,000 tonnes in August. MCUSTX-TOTAL

Stocks in warehouses monitored by the Shanghai Futures Exchange fell 5.4% from last Friday to 133,745 tonnes. CU-STX-SGH

POSITIONING: Speculators reduced their bets on lower prices. Their net short in LME copper had fallen to 6.5% of open contracts by Tuesday, from 17% late last month, broker Marex Spectron said.

TIN: Indonesia’s December exports of refined tin rose 23% year on year to 6,447 tonnes, data showed.

OTHER METALS: LME aluminium was down 0.3% at $1,799 a tonne, zinc eased by 0.2% to $2,372, lead was up 0.4% at $1,937, nickel added 0.3% to $14,125 and tin firmed by 0.2% to $17,290.

All but aluminium were up over the week.

Reporting by Peter Hobson Additional reporting by Tom Daly Editing by David Goodman

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