Copper breaks free of dollar grip

Nov 30, 2010 | 01:10 PM | Meredith Mazzilli

Copper broke free from the influence of currency moves Tuesday, climbing in New York and London and leaving some scrambling to cover short positions.

"The correlation between the metals and the dollar and euro has broken down," a London-based analyst told AMM. "The euro traded below $1.30, but it had no impact on the metals. Meanwhile, copper made a technical break higher through $8,300 (a tonne). Copper is being remarkably resilient."

The breakaway came as a surprise to some traders accustomed to seeing copper gain as the dollar declines, since a weak dollar makes dollar-denominated commodities less expensive to holders of other currencies.

But the correlation has since loosened, with copper rising even as the dollar gained some 0.652 percent against the euro by Tuesday afternoon. The most active Comex copper contract settled Tuesday up 1.5 percent from Monday's $3.7675 per pound close. Meanwhile, three-month copper on the London Metal Exchange gained just under one percent in the officials to close at $8,286 per tonne ($3.7584 per pound) before hitting $8,380 per tonne ($3.8011 per pound) by the end of the afternoon session. ....