New World Investment Research

Copper hits fresh highs after FED deliver 25bp. cut yesterday.

Lower interest rate generally leads to appreciation of copper and other metals by making them more attractive compared to assets that pay interest, like bonds and by lowering costs of borrowing, which generally results in higher levels of capital-intensive manufacturing.

U.S. Dollar Index (DXY) has been declining recently, which typically supports commodity prices by making dollar-denominated metals cheaper for global buyers and improving demand.

Chart Source: Bloomberg
LMCADS03:COM – LME COPPER 3MO
DXY:CUR – US Dollar Index