Benchmark copper prices were firmer in early trade on Tuesday, as the US dollar lost ground and risk sentiment improved after Federal Reserve policymakers allayed investor fears of a rapid pace of monetary tightening.
Three-month copper on the London Metal Exchange was up 0.3% at $9,530.50 a tonne, as of 0236 GMT, following a 2.2% decline in January, pressured by the dollar's strength and concerns over prospects of a more hawkish US central bank.
A firmer dollar makes greenback-priced metals more expensive to holders of other currencies, while higher US interest rates could trim liquidity in financial markets and hamper global economic recovery prospects, thus hurting demand for metals.
LME copper may test support at $9,394 this week
The dollar nursed its wounds following its biggest drop in nearly three weeks against major peers, as Fed policymakers signalled a lift-off in rates in March, but spoke cautiously about what might follow.
Fundamentals
Trading volumes, however, were expected to remain thin as markets in top metals consumer China remained closed for the week-long Lunar New Year holiday.
Chile's copper output ended 2021 down 1.9% at 5.68 million tonnes, the country's statistics agency said on Monday, while output in the world's top copper producer dipped 0.6% in the final month of the year to 503,605 tonnes.
Tensions between Russia and the United States over Moscow's troop build-up near Ukraine spilled into the United Nations Security Council on Monday, with both countries accusing each other of being "provocative."
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