A firmer dollar and pessimism in China keep bullish bears near four-month lows

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  • Copper remains under pressure near the four-month low on the LME, down more than 1.0% on the SFE.
  • Inflation fears propel safe-haven demand for the US dollar ahead of the NFP.
  • China’s covid woes, struggles with US challenge metal prices.

Copper prices remain lower as the US dollar strengthens and difficulties in the biggest customer, China, challenge inventory conditions and favor sellers. Commodity prices hit a four-month low on the LME earlier in the week and remain depressed thereafter.

“The three-month benchmark copper on the London Metal Exchange (LME) was down 0.4% at $9,455.50 a tonne, at 0156 GMT,” Reuters said. The news also mentioned that June’s most active copper contract on the Shanghai Futures Exchange fell 1.3% to 72,100 yuan ($10,783.89).

That said, the wave of risk aversion is drawing clues from fears that rising inflation will drive up interest rates and negatively affect global growth, which in turn is dampening industrial demand for the metal. red.

Inflation woes deepened the day before after the Bank of England (BOE) forecast double-digit inflation and an economic recession. The same has rocked the US boat amid growing inflation fears and a firmer job market, which the Fed appears to have taken lightly by rejecting 75 basis points (bps) of a rate hike .

Meanwhile, the U.S. Securities and Exchange Commission (SEC) added more than 80 Chinese companies to the list of companies likely to be delisted from U.S. stock exchanges, which portrayed new Sino-Chinese struggles. US markets and also weighed on risk appetite. Additionally, worsening covid conditions in China and the European Union’s (EU) willingness to impose more sanctions on Russia add to the risk mood.

Disappointing factory orders from Germany, weaker activity data from the West and Peru’s refusal to temporarily lift the suspension of civil liberties in an area including a major copper mine are additional challenges for price of red metal.

On the positive side, depleted inventory levels and supply shortages are motivations for buyers to stay on the table.

That being said, commodity prices are likely to remain depressed in the near term given the global headwinds and lackluster conditions in China. Today’s US jobs data could add to the metal’s weakness if Nonfarm Payrolls (NFP) stock beats expected soft numbers with strong numbers.

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