Copper futures trade near 7-week high ahead of FOMC

Copper futures traded just below a seven-week high during European morning hours on Wednesday, as market players looked ahead to the Federal Reserve’s policy decision later in the day amid expectations for further easing. Investors also continued to monitor negotiations among U.S. lawmakers to avoid the looming “fiscal cliff” crisis. On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.708 a pound during European morning trade, up 0.6% on the day. New York-traded copper prices rose by as much as 0.7% earlier in the day to trade at a session high of USD3.711 a pound. Futures rose to a seven-week high of USD3.718 a pound on December 10. Investors also focused on the outcome of the Federal Reserve’s policy meeting later in the day, amid expectations the central bank will continue to pursue a policy of monetary easing in order to support the U.S. economic recovery. Many analysts expect the Fed to announce monthly bond purchases of USD45 billion. The U.S. central bank vowed in September to buy USD40 billion in mortgage securities each month until the economy improves in a third round of what is known as quantitative easing, or QE3. The U.S. dollar came under broad selling pressure amid expectations the Fed would keep its loose monetary policy. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.1% to trade at 80.14, the lowest level since December 6. A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies. Meanwhile, investors continued to monitor developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1, unless a divided Congress and the White House can work out a compromise in the three weeks left before the deadline. President Barack Obama said recently that any solution must include spending cuts and raising revenue, including increasing taxes on the wealthiest. Republican leaders say they will agree to higher revenue, but they want to close loopholes or reduce tax breaks rather than raise rates. Without a deal, the U.S. could fall back into recession and drag much of the world down with it. Elsewhere on the Comex, gold for February delivery eased up 0.35% to trade at USD1,715.65 a troy ounce, while silver for March delivery rose 0.55% to trade at USD33.20 a troy ounce.

Courtesy: investing.com

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