Copper prices experienced a slight decline in Asian trading on Tuesday, setting a subdued mood across the market as everyone eagerly awaited crucial central bank decisions on interest rates, with a keen focus on the U.S. Federal Reserve, initiating its two-day policy meeting later today.
Prices for copper on the London Metal Exchange (LME) opened at $8400/mt, closing down by 0.68% at $8352/mt. The day saw fluctuations ranging from a low of $8342/mt to a high of $8411.
The world’s largest consumer of metals, facing a slower economic recovery from the pandemic. This concern hints at a potential reduction in copper demand, particularly with stockpiles increasing in exchange warehouses.
ANZ analysts highlighted, “Investors are on the edge, awaiting the FOMC meeting later this week, contributing to quieter markets.” They anticipate the Fed to maintain current interest rates, but robust economic data suggests a possibility of rates remaining high for an extended period.
Traders are closely monitoring the Chinese yuan’s ongoing depreciation against the U.S. dollar, a factor that could impact China’s demand for metals crucial to various industries.
Chinese state media sought to assure on Tuesday that the pressure on the yuan’s value is temporary, even though the yuan has depreciated by over 5% against the dollar this year.
In parallel, the U.S. Department of the Treasury’s data released on September 18 revealed a significant milestone, with the total national debt of the United States crossing $33 trillion for the first time on that date.
Moreover, the market was anticipating that the Federal Reserve was in the final stages of implementing interest rate hikes.