Copper steadied as a stronger dollar countered a move by China’s central bank to bolster stimulus efforts.
The greenback rose after a slew of US data, including producer prices and retail sales, pointed to persistent inflationary pressures in the economy. Copper trimmed earlier gains following the prints, under pressure from the currency it’s priced in.
The data followed a move by the People’s Bank of China to lower the reserve requirement ratio for most banks by 25 basis points. It was the second such cut this year, adding to the relatively moderate stimulus the country has implemented so far.
China’s sluggish recovery after coronavirus restrictions were eased has weighed on metals markets throughout 2023, adding to the headwinds caused by tighter US monetary policy. Traders are also eyeing Beijing’s measures to stem the slide in the yuan against the surging dollar.
A stronger local currency makes imports cheaper for domestic traders and fabricators in the world’s top metals consumer. Copper is typically positively correlated with the yuan, which has recovered after nearing a record low earlier this month.
Copper futures fell 0.1% to trade at $8,407 a ton on the London Metal Exchange by 3:01 p.m. local time. All other major contracts were higher, led by zinc which added 1.6%.