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Copper: The Dollar Soars, Trade Talks Are Scheduled

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Copper: The Dollar Soars, Trade Talks Are Scheduled

Copper fell to near a one-month low in overnight trading thanks to a stronger dollar. The U.S. dollar index hit the highest since May 2017, sending three-month copper on the London Metal Exchange (LME) to its lowest since September 4, after declining 13 percent in August and September combined.

Copper opened for trading on the COMEX this morning at $2.57 a pound. Click on the chart below for up-to-the-minute pricing.

The dip in price for the red metal could set the tone for the week as top consumer China starts a week-long holiday today to mark 70 years since the founding of the People’s Republic of China.

In spite of the holiday, there is a shadow of hope on the horizon for trade talks between the U.S. and China. News reports state the two sides are set to get back to the bargaining table shortly after the Chinese holiday.

“It’s not clear how the U.S.-China talks will progress, given there are hard-liners against China in the administration,” Takashi Hiroki, chief strategist at Monex Securities told Reuters. “But if there’s no further escalation in the upcoming meeting, markets will be relieved.”

“Sentiment over trade has been like a yo-yo, and copper has been rising and falling with optimism and pessimism,” says Andrew Hecht of Seeking Alpha. “In a positive sign for the copper market over recent sessions, inventories on both the LME and COMEX have been heading lower. LME copper stocks have declined…18%. Meanwhile, copper inventories on the COMEX division of the CME have declined 9.2%…over the past two weeks. The decline in stocks is often a bullish sign for the price of copper.”

Positive Start to the Week

Copper finished the third quarter on a roll. The commodity saw positive numbers on Monday as the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for September rose to 51.4 from 50.4 in August. The consensus was for a dip to 50.2.

Another official survey showed factory activity in China picked up in September on improving domestic demand, despite shrinking for the fifth straight month as new export orders continued to fall.

Further Reading

Frequent tED contributor Andrew Hecht takes a look at the dollar proving it is the king of the currency markets. You can read his article here.

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Jim Williams

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