Copper dips on strong dollar + fearsComment on this story
Copper fell on Friday as the euro stayed weak ahead of job data from the Unites States and as investors feared that interest
rate cuts in top metal consumer China this week suggested its economy was slowing severely.
Benchmark copper on the London Metal Exchange edged down 0.7 percent to $7,640 per tonne by 0941 GMT, from $7,695 at the close on Thursday.
The metal used in power and construction was on track for a 0.5 percent fall on the week.
China, the euro zone and Britain all loosened monetary policy on Thursday, but underwhelmed by the central banks' moves, the euro fell along with most commodities, while safe-haven gold rose.
“Copper fell mainly due to the dollar, which appreciated quite significantly against the euro after the ECB decision, which put severe pressure on commodities,” Daniel Briesemann, an analyst at Commerzbank, said.
The euro stayed close to a five-week low against the dollar on Friday, a day after the interest rate cut by the European Central Bank (ECB) dampened the common currency's appeal and the bank failed to take more aggressive stimulus measures.
“Also the rate cut in China raised concerns that a string of economic data that will be published next week might be significantly weaker than previously expected. One could argue that China's central bank knows something that people don't and bad data would raise more fears of a hard landing in China,” Briesemann said.
China's rate cut preceded comments by Vice Premier Wang Qishan that the world's second-largest economy would have difficulty meeting its 10 percent trade growth target this year, which some investors said may signal its is deeper than expected.
“Instead of being encouraged by the central banks' moves, many interpret them as a sign that these governments are worried
about their economies,” said a Shanghai-based trader.
“Many prefer to play it safe especially ahead of tonight's U.S. non farm payroll data.”
KEY JOB DATA
After the raft of interest rates cuts, investors are now focusing even more on what the U.S. Federal Reserve will do at its meeting at the end of the month.
Some encouraging data on the labour market on Thursday tempered expectations the Fed could undertake a third round of bond purchases, known as quantitative easing or QE3, but more weight will be given to Friday's non-farm payrolls report.
U.S. employers probably quickened the pace of hiring last month but not enough to allay worries that Europe's debt crisis is shifting the economy into low gear, economists said in a Reuters survey.
In other metals, aluminium was at $1,929.12 from $1,944 at the close on Thursday; while zinc, used in galvanizing, was at $1,857.50 from $1,854 and battery material lead was at $1,873 from $1,887.
Tin was at $18,865 from a last bid of $18,875 on Thursday, while nickel was at $16,566 from $16,700. -Reuters