[Click here for an interactive chart of copper prices]
The dollar index dropped after Japan intervened in the currency market to shore up the battered yen for the first time since 1998.
“A weaker dollar is definitely helpful, the question mark is how long that can be sustained when you’ve got the Fed being aggressive with rate increases,” said Nitesh Shah, commodity strategist at WisdomTree in London.
“Chinese data may be giving some hope that its loosening monetary and fiscal policy is starting to bear some fruit in terms of final demand for industrial metals.”
Shanghai on Tuesday announced 1.8 trillion yuan investment worth of infrastructure projects, heeding national policymakers’ calls to revive sluggish economic growth. The construction industry consumes a vast amount of metals.
“Onshore (Chinese) sentiment is largely positive. It’s also a function of people deploying capital post FOMC (Federal Open Market Committee) event,” said analyst Zenon Ho at broker Marex, referring to the U.S. Federal Reserve’s rate hike.
London Metal Exchange (LME) warehouses saw 11,200 tonnes of copper arrivals on Tuesday, the largest single-day warranting since June.
Inflows have totaled over 35,000 tonnes so far this month but have been largely offset by departures. Headline stocks of 118,000 tonnes are up by only 3,625 tonnes at the end of August.
LME inventory remains ultra-low by any historical yardstick, representing just two days’ worth of global usage.
(With files from Reuters)
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