FX:Copper futures hit 8-day high on EU hopes, dollar weakness
Forexpros - Copper futures were sharply higher on Monday, climbing to an eight-day high as hopes that euro zone policy makers will take action to tackle the region’s debt crisis boosted appetite for riskier assets, while a broadly weaker U.S. dollar also lent support.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.345 a pound during European morning trade, surging 2.17%.
It earlier rose by as much as 2.29% to trade at USD3.348 a pound, the highest price since September 28.
Following a meeting in Berlin on Sunday, German Chancellor Angela Merkel and French President Nicolas Sarkozy said that they have reached an agreement to recapitalize European lenders, though few details were provided.
The package will be revealed by the next G20 summit in Cannes starting November 3, according to reports.
The announcement saw risk appetite recover, prompting investors to move in to riskier assets, such as commodities and high yielding currencies, dampening the appeal of traditional safe haven assets like the U.S. dollar.
The euro jumped nearly 1.5% against the greenback, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 1.08% to trade at an eight-day low of 78.23.
A weaker dollar boosts demand for raw materials as an alternative investment and makes metals priced in the currency cheaper for holders of other currencies.
Copper prices found further support after the International Copper Study Group, a London-based industry group released its latest assessment of copper supply and demand estimates earlier in the day.
According to ICSG data, global growth in copper demand for 2012 is expected to exceed global growth in copper production, with a production deficit of about 250,000 metric tonnes of refined copper expected for the year.
By 2013, however, increased production and lower growth in demand are expected to yield a nearly balanced market.
Elsewhere on the Comex, gold for December delivery climbed 1.89% to trade at USD1,666.75 a troy ounce, while silver for December delivery rallied 3.87% to trade at USD32.19 a troy ounce.
