LONDON - Copper prices experienced fluctuations this week as market participants weighed a mix of global economic indicators, including China's industrial data and movements in the US dollar. On Thursday, the London Metal Exchange's (LME) three-month copper contract edged up slightly by 0.1%, while the Shanghai Futures Exchange's (SHFE) December copper contract declined by 0.3%.
The shifts in copper prices have been influenced by various factors. Wednesday's robust industrial output from China initially drove copper prices to near six-week highs. However, concerns over China's property sector and a strengthening dollar capped these gains. The dollar's strength continued into Thursday, buoyed by solid US retail sales data and indications of slowing inflation, which contributed to a minor pullback in copper prices.
The strength of the dollar is particularly significant for commodities priced in the currency, as it determines their affordability for holders of other currencies. This week, the US dollar faced weekly losses due to disappointing US economic data, which hinted at a possible easing of the Federal Reserve's tight monetary policy stance. Such a shift could make dollar-priced commodities like copper less expensive for international buyers.
In China, persistent declines in home prices over the past four months have raised demand concerns, which could impact copper consumption in the world’s largest user of the metal. Additionally, ANZ Research pointed out that increased domestic production of refined copper in China could further influence market dynamics.
Other metals traded on both LME and SHFE saw varied price movements. SHFE lead bucked the trend with a rise, while aluminum, nickel, zinc, and tin experienced dips across both exchanges.
Looking ahead, traders are focusing on several key events that could affect the markets. These include upcoming UK retail sales data, European Central Bank President Christine Lagarde's keynote speech at the 33rd Frankfurt European Banking Congress, and the release of US Housing Starts Number for October. The Bank of England's Megan Greene is also set to participate in a panel discussion about the monetary policy outlook, and final data for EU HICP for October will be released.
Market trends are expected to continue being influenced by the interplay between dollar dynamics and China’s copper production activities amidst global economic developments.
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