LONDON: Copper prices rose on Friday as disappointing US October jobs gain has firmed up chances of Federal Reserve interest-rate cut next week to weaken the dollar.
Three-month copper on the London Metal Exchange (LME) rose 0.5% to $9,554.5 per metric ton as at 1722 GMT. The industrial metals prices were supported by a weaker dollar, which makes greenback priced metals cheaper for holders of foreign currencies.
The dollar erased early gains to trade lower after US nonfarm payrolls gains fell short of expectations amid disruptions from hurricanes and strikes by aerospace factory workers in October. A soft labour market made traders pricing about a 99% chance of a quarter-point interest-rate cut for US central bank meeting on Nov. 7, compared to 92% before.
A lower interest rate discourage foreign investments to pressure the dollar. Trading volumes in industrial metals overall remained thin with market taking a wait-and-see approach amid the uncertainty over the Nov. 5 presidential election, said CRU analyst Craig Lang. The election outcome is a determinant of tariff policies between US and top metals consumer China. Polls indicate a close race between Donald Trump and Kamala Harris. The uncertainty pushed dollar/offshore yuan on Friday to a level not seen since August 2015.
The US election result could even affect the size of China’s stimulus to revive the fragile economy of the world’s biggest metals consumer. Beijing mulled issuance of over 10 trillion yuan ($1.4 trillion) in extra debt, a fiscal package that would be further bolstered if Trump is elected. Whether the stimulus could feed into Chinese industrial sector remains a key question for metal investors.
China’s October manufacturing activity swung back to expansion for the first time in six months, with improvement in export orders close to the year-end.
For other metals, LME aluminium dropped 0.8% to $2,598 a ton and is the only base metal registering a decline on Friday. Producers selling forward to lock in higher prices were evident in aluminium, brokerage Marex said at a commentary.
Lead rose to a one-week high of $2,070.2 earlier. It last traded 0.7% higher at $2,034. Nickel increased 1.4% to $15,945, zinc advanced 1% to $3,059 and tin gained 2.1% at $31,840.