Copper futures edge lower ahead of Fed decision

Copper futures edged lower during European morning hours on Thursday, trading below the previous session’s four-month high as investors looked ahead to a speech by Federal Reserve Chairman Ben Bernanke later in the day for more clarity on the central bank’s monetary policy. On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.685 a pound during European morning trade, shedding 0.2%. Prices were stuck in a tight trading range of USD3.673 a pound, the daily low and a session high of USD3.700 a pound. Copper futures rallied to a four-month high of USD3.731 a pound on Wednesday. Market players eyed the outcome of the Fed’s two-day policy meeting later Thursday, amid growing speculation that the U.S. central bank may announce a third round of bond purchases, or quantitative easing, to boost sluggish growth in the world’s largest economy. Market expectations of a QE3 announcement this week increased after last Friday’s weaker-than-expected jobs report and following a speech from Fed Chief Ben Bernanke at Jackson Hole last month. Past monetary stimulus rounds weakened the U.S. dollar, boosting the price of dollar-denominated commodities like copper. Copper prices drew further support from a weaker U.S. dollar. The euro held near a four-month high against the greenback after Germany’s constitutional court approved the country’s participation in the euro zone’s bailout fund, the European Stability Mechanism on Wednesday. The ruling cleared the way for Germany’s president to ratify the ESM under certain conditions, allowing the European Central Bank’s bond purchasing program to proceed. The German court said that the country’s liability to the EMS must not exceed EUR190 billion without the approval of the lower house of parliament and said that both houses of parliament must be kept informed about decisions relating to the ESM. Copper traders were also looking to China, amid growing expectations Beijing will introduce further stimulus measures to boost cooling growth in the world's second largest economy. Chinese Premier Wen Jiabao said earlier in the week that the government could utilize a CNY100 billion fiscal stability fund to boost growth if needed. China’s government last week approved a USD157 billion infrastructure spending program to help stimulate the economy. Elsewhere on the Comex, gold for October delivery eased down 0.1% to trade at USD1,729.65 a troy ounce, while silver for December delivery fell 0.65% to trade at USD34.08 a troy ounce.

Courtesy: ForexPros