Copper ticks up as Fed rate hike bets cool

Copper nudged up on Monday, following equity market gains and supported by an improving demand outlook after cooling interest rate expectations outweighed pressure from a strong dollar. Benchmark three-month copper on the London Metal Exchange was up 0.31% at $14,302 a metric ton by 0700 GMT. "Copper is helped by uptick in equities as US Fed rate hike possibilities in October are dimming," Sandeep Daga, head of research at Metal Intelligence Centre, said. Odds of an October US Federal Reserve interest rate hike fell after weaker-than-expected US jobs data last week. Wall Street gained late on Friday and Japan's Nikkei jumped on Monday, boosted by AI shares. Rate traders are now pricing in an 18% chance of a rate hike at this month's Fed meeting, down from 71% a week ago, according to the CME's FedWatch tool. Higher interest rates can dampen economic activity and weigh on demand for growth-dependent industrial metals like copper. Meanwhile, the US dollar rose on Monday to a near 17-month high, boosted by a weak euro. The dollar index, which measures the currency against six major units, was up 0.36%. A stronger dollar can weigh on commodities denominated in the currency by making them more expensive for buyers using other currencies. The market is closely awaiting the return of leading consumer China to see if it returns as a buyer. China's stocks are thin and smelter maintenance suspensions lined up, but domestic demand also appeared weak, Daga said. Aluminium rebounded from earlier losses and rose 0.13%, putting it on track to snap a five-day losing streak, after falling earlier to its lowest in over three months on a stronger dollar. Among LME metals, zinc lost 0.58%, lead added 0.19%, nickel lost 0.36% and tin dipped 0.26%. The Shanghai Futures Exchange was closed for China's National Day and will reopen on October 8.