Copper Futures Rebound
Source: Bloomberg, Anna Stablum (10/20/10)
"Copper recovers from biggest drop since July as USD resumed slide."
The greenback fell as much as 1.4% against a basket of major currencies. Copper in New York slid 2.5% yesterday, the most since July 16, after China, the world's biggest metal consumer, raised interest rates.
"It looks like the knee-jerk reaction to the China rate hike is over, and the market has had time to absorb the implications," said Alex Heath, the head of industrial-metal trading at Royal Bank of Canada Europe Ltd. in London. "The key again will be the dollar."
Copper futures for December delivery rose 0.7% to $3.784 a pound at 11:37 a.m. on the Comex in New York. Before today, the metal gained 27% in the past year.
China unexpectedly raised borrowing costs for the first time since 2007, lifting the benchmark one-year lending rate and the deposit rate by a 0.25 percentage point.
The increase "is being seen as a vote of confidence in the resilience of the Chinese economy and should not derail it or impact levels of base-metal consumption for the longer term," Heath said.
Copper for delivery in three months rose $47, or 0.6%, to $8,307 ($3.77 a pound) a metric ton on the London Metal Exchange. Aluminum, lead, nickel, tin and zinc also gained.