Copper prices rose slightly during trading on Monday, supported by improved demand expectations after the decline in bets on raising US interest rates, which overshadowed the pressures resulting from the strength of the dollar.
The three-month standard copper price on the London Metal Exchange rose by 0.19 percent to $14,286 per metric ton by 03:00 GMT, according to Reuters.
Investors are evaluating the decline in the possibility of the US Federal Reserve raising interest rates during its scheduled meeting this month, after US jobs data last week came in weaker than expected, which eased expectations of continuing to tighten monetary policy to confront inflationary pressures.
According to the CME Group's Fed Watch tool, traders are now pricing in only an 18 percent probability of a rate hike at the October meeting, compared to 64 percent a week ago.
High interest rates typically slow economic activity and reduce demand for industrial metals associated with economic growth, such as copper.
On the other hand, the US dollar rose to a level approaching its highest levels in 17 months, supported by the weakness of the euro, while the dollar index, which measures the performance of the US currency against a basket of six major currencies, rose by 0.53 percent.
The strength of the dollar constitutes a pressure on primary commodities denominated in the US currency, as it makes them more expensive for buyers who hold other currencies.
Copper also benefited from the decline in oil prices, as high energy costs during the recent period contributed to enhancing inflationary pressures and negatively affecting metal prices. The decline in oil was driven by an increase in crude exports from the Middle East and the G7 countries releasing part of their oil reserves, which boosted supplies in the markets.
In the other metals market, aluminum fell by 0.19 percent to its lowest level in more than three months at $3,091.5 per ton, continuing its losses for the sixth session in a row.
Aluminum has lost more than 18 percent of its value since reaching its highest level in four years in June, with concerns about supplies receding and expectations increasing for the addition of new production capacities in Indonesia.
As for the rest of the metals traded on the London Stock Exchange, zinc decreased by 0.44 percent, while lead rose by 0.3 percent, nickel declined marginally by 0.01 percent, while tin rose by 0.24 percent.
The Shanghai Futures Exchange was closed due to the National Day holiday in China, and trading will resume on October 8.
Japan announced on Monday that it does not intend to release new quantities of its oil reserves, despite the G7 agreement to withdraw 100 million barrels of crude oil and diesel from emergency stocks, at a time when concerns are mounting about rising global fuel prices.
Japanese Chief Cabinet Secretary, Minoru Kihara, said that his country does not intend, at the present time, to release additional quantities of crude oil from its national reserves, noting that Japan had previously withdrawn supplies from stocks.
Kihara added, in a press conference: “Japan has been releasing oil from its reserves for some time, and at this stage there are no plans for an additional release.”
The Japanese official's statements come after the G7 agreed, on Friday, to release 100 million barrels of diesel and crude oil from emergency reserves, while pledging to avoid imposing restrictions on energy exports.
The agreement came at a time when Europe is under US pressure to withdraw emergency diesel stocks, amid rising fuel prices and fears of the repercussions of energy supply disruptions linked to the US-Israeli war on Iran.
It is still unclear how much quantities will be included in the new withdrawal, out of 400 million barrels that 32 member states of the International Energy Agency agreed to release in March to alleviate supply disruptions.
The Executive Director of the International Energy Agency, Fatih Birol, said last week that member states had released about two-thirds of the agreed upon amount of 400 million barrels.
Japan announced, in March, that it would release about 80 million barrels of oil from its reserves, within the framework of the coordinated agreement, and it also implemented a second round of releasing national crude oil stocks last May.
Kihara said that the Group of Seven meeting was held in light of the delay in the release of European strategic reserves and the increasing concerns about the rise in global diesel prices, explaining that the discussions focused especially on measures to confront diesel prices in Europe, the United States and other regions.
The Qatar Central Bank and Euroclear Group announced on Monday that Qatar will establish a clearing and settlement link with the group for its local government bonds, in a move aimed at expanding the international investor base and enhancing liquidity in the local debt market.
The two parties said in a joint statement that the initiative is expected to improve market efficiency and enhance international capital flows to Qatar, at a time when global investors are increasingly interested in debt instruments issued by emerging markets and denominated in local currencies.
Under the new link, international investors will be able to purchase, hold and settle government bonds and Qatari sukuk denominated in Qatari riyals, which meet the conditions, through Euroclear’s international settlement system.
Euroclear, headquartered in Belgium, is a financial market infrastructure group that provides securities settlement and custody services, allowing banks and investors to hold, transfer and settle financial assets.
Under the new structure, Euroclear will provide international settlement services, while Edaa, the central custodian for securities in Qatar, will continue to provide its services to local investors. The Qatar Central Bank will remain responsible for issuing securities and making payments to investors.
Sheikh Ahmed bin Khalid bin Ahmed Al Thani, Deputy Governor of the Qatar Central Bank, said that cooperation with Euroclear represents “a practical step towards expanding international access to Qatari government debt instruments,” and enhancing the presence of the Qatari market and its visibility among global investors.
