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Dollar strength sends copper to lowest in nearly two months

06/17/2021 | 01:38am EDT

HANOI, June 17 (Reuters) - London copper prices fell to their lowest in nearly two months on Thursday, weighed down by strength in the dollar after the U.S. Federal Reserve brought forward its outlook for an interest rate increase.

Three-month copper on the London Metal Exchange (LME) fell 1.9% to $9,487.50 a tonne by 0734 GMT, having dropped as much as 2.6% earlier in the session to the April 23 low of $9,415.

The most-traded July copper contract on the Shanghai Futures Exchange closed 0.3% down at 68,800 yuan ($10,696.68) a tonne.

The dollar reached its strongest in almost two months against major rivals as the Fed began closing the door on its pandemic-driven monetary policy.

A stronger U.S. currency makes dollar-priced metals more expensive and less appealing to holders of other currencies.

"Due to the sharp increase of Fed officials' expectations for the future economic outlook, the U.S. dollar has been greatly boosted," Huatai Futures said in a note.

The Fed signal, coupled with China's plans to sell state reserves of copper, pressured prices, the company said, recommending a "wait-and-see" approach for investors.

LME nickel dropped 1.4% to $17,395 a tonne, aluminium fell 1.1% to $2,442, zinc shed 0.6% to $3,007 and lead was down 0.8% at $2,185.

ShFE nickel retreated by 1.9% to 127,720 yuan a tonne, aluminium edged down 0.2% to 18,690 yuan and zinc advanced 0.4% to 22,650 yuan.

FUNDAMENTALS

* China's production of secondary aluminium will almost triple by the end of this decade if all announced recycling projects come to fruition, Rusal said, as the country caps primary smelting capacity and looks to reduce emissions.

* For the top stories in metals and other news, click or ($1 = 6.4319 yuan) (Reporting by Mai Nguyen Editing by Aditya Soni and David Goodman )


ę Reuters 2021
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