Copper hits one-month high as US dollar retreats

LONDON — Copper prices touched their highest in a month on Wednesday as the dollar retreated on weaker than expected US labor market data that investors bet could give the US Federal Reserve room to start cutting interest rates.

The data, ahead of a Fed policy decision at 1900 GMT, lifted copper after it had come under pressure from a contraction in Chinese manufacturing activity in January.

Three-month copper on the London Metal Exchange (LME) hit $8,704.50 per metric ton, its highest since Dec. 28, after the US data. It was last trading at $8,611.

US labor costs rose less than expected in the fourth quarter, leading to the smallest annual increase in two years, while the ADP National Employment Report showed private payrolls increased by a smaller than expected 107,000 jobs in January.

The dollar index fell after the data. A weaker US currency makes dollar-denominated metals cheaper for buyers using other currencies.

China’s manufacturing activity contracted for a fourth straight month in January, suggesting the sprawling sector and broader economy were struggling to regain momentum at the start of 2024.

The yuan was set for its biggest monthly drop in five months, with major state-owned banks selling dollars to guard the currency.

Copper stocks in LME-registered warehouses were at 146,475 tons, down 24% since October and at their lowest since September.

China’s demand for metals such as copper and aluminum still showed “surprising resilience,” said WisdomTree commodity strategist Nitesh Shah, citing record power grid investment and rising production of solar panels.

LME zinc dropped 1.5% to $2,525.50 a ton; aluminum edged up 0.1% to $2,276.50; nickel fell 1.8% to $16,210; lead CMPB3 was down 0.9% at $2,156.50; while tin CMSN3 gained 0.8% to $26,200. —