Copper hit by QE tapering fears

The price of copper is off for the second day in a row over concerns the US Federal Reserve will curtail it stimulus scheme.

Dennis Lockhart, president of Chicago Federal Reserve, argued that tapering of the US quantitative easing (QE) programme could happen before the end of year – and  as early as September.

Since copper is traded in US dollars, if the Fed does reduce its QE scheme, it could drive up the dollar, which could have a negative impact on the price of copper.

Traders will be keeping an eye on US economic updates, as a stream of positive updates could give rise to speculation that the Fed will reduce its bond-buying operation sooner rather than later.

China is also in focus as the world’s largest importer of copper. According to the latest HSBC survey, Chinese manufacturing is at an 11-month low. Chinese trade balance and inflation numbers are released on Thursday and Friday respectively, offering the latest data on imports and consumer demand.

High Grade Copper (Sep 13) chart

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