All trading involves risk. Losses can exceed deposits.

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.

All trading involves risk. Losses can exceed deposits.

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

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.