Copper on 1-week low on stronger dollar

Copper fell to the lowest since August 22 as a stronger dollar pushed dollar-priced commodities down. Escalating geopolitical tension weighed on demand for riskier assets as investors sought safe haven security.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December fell to $3.312 per pound at 10:55 GMT, down 0.72% on the day. Prices held in range between days high of $3.354 and low at $3.309 per pound, the lowest since August 22. The industrial metal settled almost unchanged on Tuesday but extended its weekly decline to 1.25% following Wednesdays plunge.

Copper was supported throughout the day following yesterdays positive U.S. data that boosted the metals demand prospects in the worlds second biggest consumer. The Conference Board reported on Tuesday that its Consumer Confidence index rose to 81.5 in August, confounding analysts’ expectations for a drop to 79.0 from the preceding month. June’s reading was revised upward to 81.0 from 80.3.

The metal was also underpinned as the Chinese State Administration of Foreign Exchange announced yesterday it will allow qualified institutional investors to freely transfer funds in yuan or foreign currencies in or out of the country.

Xu Liping, an analyst at HNA Topwin Futures Co., commented for Bloomberg: “The change will make it easier for domestic investors to put money into overseas securities.”

The positive news however were offset by escalating tension between the U.S. and the Syrian regime. The United States, Great Britain and France moved closer to a military attack as they laid justifying legal groundwork for taking action against the Syrian regime which allegedly used chemical weaponry against civilians last week.

Defense Secretary Chuck Hagel told the BBC the U.S. military is “ready to go” if Obama makes the order. “We have moved assets in place to be able to fulfill and comply with whatever option the president wishes to take,” Hagel said yesterday during a trip to Brunei for the BBC. This comes after U.S. Secretary of State John Kerry announced on Monday that there is “undeniable” evidence the Syrian regime led by President Bashar al-Assad used chemical weaponry against civilians in the Damascus suburbs last week. Assad denied responsibility and blamed rebels for staging the attacks.

Concerns over the seen by many as imminent international intervention in the Syrian civil war stoked demand for save haven investments, such as gold and currencies. The dollar index, which tracks the greenbacks performance against a basket of six major currencies, rose by 0.32% to 81.44 at 10:50 GMT. The September contract ranged between days high and low of 81.45 and 81.14 respectively. Futures fell 0.34% on Tuesday, which was offset by Wednesdays advance, and rose back to positive territory at 0.03%.

Market players will be keeping a close eye on this week’s U.S. economic data to further gauge Quantitative Easing’s tapering prospects. Wednesday’s Pending Home Sales might have advanced by 0.1%. On Thursday, the Preliminary Revised GDP is likely to have grown by 2.3%, while consumer spending and core consumer spending (Personal Consumption Expenditures) probably surged by 1.8% and 0.8% in the second quarter respectively. Initial Jobless Claims probably fell by 1 000 in the week ending August 24. On Friday, Personal Income and Spending are expected to have advanced in July but at a slower pace than in June. Core PCE on monthly and annual basis likely rose in July and the Chicago PMI and Final University of Michigan Confidence are projected to have advanced in August as well.