Copper: Renews its two-week high as dollar weakness meets supply concerns

• Copper posts a three-day uptrend despite recession fears and pre-Fed anxiety.
• The drop in the dollar and fears of a lower supply from China and Peru also underpin the recovery movements.
• US consumer confidence and slowdown rumors may entertain traders ahead of the FOMC.

Copper prices remain firm as markets cheer on a softer dollar as well as rumors of further supply constraints. That said, COMEX futures for the red metal are up for the third day in a row to $3.41, gaining 1.55% intraday on Tuesday.

It should be noted that the Three-month copper prices on the London Metal Exchange also rise around 1.5% as the bulls attack the $7,600 mark. Also, the metal’s top-traded September contract on the Shanghai Futures Exchange (SFE) advanced 2.1% to 58,350 yuan ($8,640.86) a tonne.

For its part, the Dollar Index (DXY) falls for the fourth consecutive day, now standing around 106.40. Recently, a rebound in 10-year US Treasury yields, down 2.8 basis points to near 2.79%, appears to favor the dollar. However, weaker US data and economic slowdown fears, recently aided by global ratings giant Moody’s weigh on the US dollar.

Separately, Chinese miner MMG Ltd said on Monday, according to Reuters, that it had suspended its copper output targets for the year following a 60% drop in output due to a lengthy protest at its Las Bambas mine in Peru. , which significantly disrupted operations.

Expected declines in output from the world’s largest copper producer, Peru, are also provoking buyers of the metal amid hopes of a supply squeeze.

Conversely, fears of recession and high inventories in China, as well as the dragon nation’s inability to regain economic traction, also keep copper buyers in check: “China’s economic slowdown is spreading to major exporting nations in Europe and East Asia through falling demand for manufactured goods, causing Germany and South Korea to run rare deficits with the world’s second largest economy,” Bloomberg noted.

Looking ahead, the US CB Consumer Confidence for the month of July will precede Wednesday’s Federal Open Market Committee (FOMC) meeting on the calendar. Talks about the recession will also be important.