Copper Extends its Decline – Weak China Demand, Strong Dollar Weigh
Aiswarya Gopan • 1 min read
Copper has fallen sharply to trade close to a 10-week low a few days after the Fed’s hawkish statement strengthened the US dollar even as China announced its decision to tap into reserves to offset the steep rise in commodities’ prices. At the time of writing, COPPER is trading around $4.12.
On the LME, the three-month copper lost around 0.4% of its value to trade well below the $10,000 level touched a few weeks ago. Over the past week alone, the contract lost around 8.6% of its value, posting the worst weekly performance seen since March 2020.
The bearish moves were bolstered after the US dollar received a boost following the release of the most recent FOMC statement last week. The Fed’s release revealed that a majority of policymakers were turning more hawkish and anticipated a rate hike sooner than initially planned, possibly as soon as 2023. A stronger dollar makes commodities like copper more expensive to purchase for holders of other currencies, thereby reducing its appeal.
Copper is also trading under pressure over a weakening in the demand for the industrial metal across China, one of the leading consumers of the commodity worldwide. Data released by the customs department revealed that China’s exports of the metal rose for the third consecutive month during May, touching the highest level seen in over a year.