Copper and Aluminum Fall With Strong Dollar To Blame

Copper and aluminum paced declines by industrial metals in London as the dollar climbed, denting demand for commodities as an alternative investment.

The dollar reached a four-year high against a 10-currency basket after data showed U.S. new-house sales surged, adding to signs of expansion in the world’s biggest economy. A stronger dollar makes commodities priced in greenbacks more expensive in terms of other monies. Metals also fell amid speculation supplies might increase as stockpiles tied up in so-called financing deals in China come onto the market.

“It’s the cross-commodity weakness that we’re seeing” on the back of dollar gains and slowing growth in some nations, Robin Bhar, an analyst at Societe Generale SA in London, said by phone. “China, euro zone, Japan are all showing weak growth.”

Copper for delivery in three months declined 0.3 percent to $6,724 a metric ton by 12:39 p.m. on the London Metal Exchange. Futures for December delivery fell 0.4 percent to $3.04 a pound on the Comex in New York.

“Base-metal prices (and even more so precious metals) are predominantly driven by the U.S. dollar today,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail.

Investigators in China discovered almost $10 billion in fraudulent trades, some related to fake deals at the port of Qingdao. Security officials are investigating whether metals held in bonded facilities at the port were pledged more than once to get loans.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza