Benchmark copper prices were firmer in early trade on Tuesday, as the US dollar lost ground and risk sentiment improved after Federal Reserve policymakers allayed investor fears of a rapid pace of monetary tightening.
Three-month copper on the London Metal Exchange was up 0.3 percent at $9,530.50 a ton, following a 2.2 percent decline in January, pressured by the dollar’s strength and concerns over prospects of a more hawkish US central bank.
A firmer dollar makes greenback-priced metals more expensive to holders of other currencies, while higher US interest rates could trim liquidity in financial markets and hamper global economic recovery prospects, thus hurting demand for metals.
The dollar nursed its wounds following its biggest drop in nearly three weeks against major peers, as Fed policymakers signaled a lift-off in rates in March, but spoke cautiously about what might follow.
