US copper futures ended near their session highs on Tuesday in anticipation of an expected decision by the Federal Reserve to slash interest rates by as much as one full percentage point. Copper for May delivery settled up 6.15 cents at $3.7465 a lb on the New York Mercantile Exchange's Comex division, near the upper end of its $3.6605-$3.7625 session range.
Final estimated futures volumes totalled 11,589 lots, down from the 21,229 lots recorded on Monday. Open interest in the market fell by 1,539 lots to 102,214 contracts open as of March 17. "There was a little bottom-feeding today. Yesterday was predominantly asset liquidation and a little bit of squaring up ahead of the Fed number, and right now, it's all anticipation," said Frank McGhee, head precious metals trader with Integrated Brokerage Services LLC in Chicago.
After copper settled, the Federal Reserve cut a key US interest rate by three-quarters of a percentage point, a substantial cut but smaller than many in financial markets had expected.
Many market participants expected the Fed to slash overnight rates by a full point, leading to some after-hours profit taking on the news. "It's really a case where everybody was long on the announcement and now they're just taking profits," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
"But we have not given the market enough time to filter in the last cut." The Fed's action takes the bellwether federal funds rate to 2.25 percent, the lowest since February 2005, and comes two days after the central bank announced the latest in a series of emergency measures to stem a fast-spreading global financial crisis.
The Fed has now cut rates by 3 percentage points since mid-September, including 2 points since the start of the year in an effort to stimulate the economy.
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