Metals: Stronger Dollar Drags Down Copper

By David Hodari Features Dow Jones Newswires

Copper prices slid on Friday, with the base metals complex closing out an otherwise steady week with losses as the dollar strengthened.

Continue Reading Below

The price of copper was down 1.34% at $6,904.50 a metric ton in midmorning trade.

Gold, meanwhile, gained 0.05% to $1,271.68, recovering from early-day losses.

Base metals prices were under pressure as the dollar hit three-month highs after sharply rallying in recent weeks.

The WSJ Dollar Index, which measures the dollar against a basket of 16 other currencies, was up 0.22% at 87.98, having rallied more than 4% since early September. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.

"I think [copper's drop] is mostly down to the dollar plus some profit-taking at the end of a fairly steady week," said Robin Bhar, head of metals research at Société Générale.

Continue Reading Below

The rising dollar came after the European Central Bank said Thursday it would extend its bond-buying program, albeit at a reduced level, through September 2018. That confirmed investors' expectations that the central bank's move away from crisis-era stimulus policies would be gradual.

The euro responded to the ECB policy statement with its sharpest daily decline versus the dollar since the U.K.'s Brexit referendum in June 2016.

U.S. political developments also buoyed the dollar, ING said in a note. The House of Representatives adopted a budget Thursday, clearing a hurdle in the Trump administration's effort to rewrite the country's tax code.

Looking ahead, traders were keeping an eye on the Federal Open Market Committee, with the body due to meet next week in its final monthly meeting before a widely-expected rate increase announcement in December, ING said.

Investor bets were last giving a 99.9% probability to the likelihood of a December rate increase, according to data from CME Group.

Among precious metals, silver was down 0.24% at $16.75 a troy ounce, palladium fell 0.61% to $966.20 a troy ounce and platinum fell 0.16% to $916.70 a troy ounce.

Among base metals, zinc rose 1.57% to $3,168.50 a metric ton, aluminum fell 1.69% to $2,154 a metric ton. Tin fell 0.48% to $19,830 a metric ton, nickel fell 2.21% to $11,505 a metric ton and lead fell 1.43% to $2,445 a metric ton.

Write to David Hodari at David.Hodari@wsj.com

Copper prices slid on Friday, with the base metals complex closing out an otherwise steady week with losses as the dollar strengthened.

Copper for December delivery was recently down 3.1% at $3.0780 a pound on the Comex division of the New York Mercantile Exchange, trading at a two-week low.

Meanwhile, gold for December delivery was recently up 0.1% at $1,270.90 a troy ounce.

Base metals prices were under pressure as the dollar hit three-month highs after sharply rallying in recent weeks.

The WSJ Dollar Index, which measures the dollar against a basket of 16 other currencies, was recently up 0.14% at 87.90, having rallied more than 4% since early September. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.

"I think [copper's drop] is mostly down to the dollar, plus some profit-taking at the end of a fairly steady week," said Robin Bhar, head of metals research at Société Générale.

The rising dollar came after the European Central Bank said Thursday it would extend its bond-buying program, albeit at a reduced level, through September 2018. That confirmed investors' expectations that the central bank's move away from crisis-era stimulus policies would be gradual.

The euro responded to the ECB policy statement with its sharpest daily decline versus the dollar since the U.K.'s Brexit referendum in June 2016.

U.S. political developments also buoyed the dollar, ING said in a note. The House of Representatives adopted a budget Thursday, clearing a hurdle in the Trump administration's effort to rewrite the country's tax code.

Looking ahead, traders were keeping an eye on the Federal Open Market Committee, with the body due to meet next week in its final monthly meeting before a widely expected rate-increase announcement in December, ING said.

Investor bets were last giving a 99.9% probability to the likelihood of a December rate increase, according to data from CME Group.

--Stephanie Yang contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

October 27, 2017 12:07 ET (16:07 GMT)