Copper retreats from five-month high as Fedspeak, cautious mood favor US Dollar

• Copper snaps four-day uptrend to ease from the highest levels since June.
• Market sentiment sours Fed’s Waller emphasized the need for more data to welcome policy doves.
• Anxiety ahead of the Biden-Xi meeting adds strength to the risk aversion.
• China’s easing of Covid controls, supports for real-estate sector restricts downside moves.

Copper price dropped from a five-month high as buyers take a breather amid mixed sentiment, as well as the US Dollar’s rebound, during early Monday morning in Europe.

While portraying the mood of the metal traders, the Copper Futures in COMEX drop 1.24% intraday as it reverses from the highest levels since late June to $3.88 by the press time. On the same line, Reuters conveyed that a three-month Copper contract on the London Metal Exchange (LME) was down 0.4% at $8,453 a tonne by 05:43 GMT.

The red metal began the week on a positive side while tracking the weekend announcements from China suggesting a further easing of the Covid controls and measures taken to ease the pain of the real estate market by a 16-point plan.

However, comments from US Federal Reserve (Fed) Governor Christopher Waller, as well as gloomy statements from the International Monetary Fund (IMF), exerted downside pressure on the market’s sentiment and the Copper price.

Fed’s Waller said, “Rates will not fall until there is ‘clear, strong evidence’ inflation is falling,” which in turn curtailed the dovish bets on the Fed’s next moves. The policymaker, however, also mentioned that the Fed can begin to consider moving at a slower pace. On the other hand, the IMF blamed the darker outlook on tightening monetary policy triggered by persistently high and broad-based inflation, weak growth momentum in China, and ongoing supply disruptions and food insecurity caused by Russia’s invasion of Ukraine, per Reuters.

Elsewhere, anxiety ahead of the Group of 20 Nations (G20) meeting in Bali, especially the meeting between US President Joe Biden and his Chinese counterpart Xi Jinping, also exerts downside pressure on the metal prices. Ahead of the event, up for taking place around 09:30 AM GMT, Reuters quotes US President Biden as saying that the US communication lines with China would stay open to prevent conflict, with tough talks almost certain in the days ahead. The news also mentioned, “The United States would ‘compete vigorously’ with Beijing while "ensuring competition does not veer into conflict", said Biden, stressing the importance of peace in the Taiwan Strait during an address to the East Asia Summit in Cambodia. He arrived in Bali on Sunday night.” On the same line, US Treasury Secretary Janet Yellen also mentioned, per Reuters, “Biden-Xi meeting aimed at stabilizing u.s. relationship with china, but have been clear about national security concerns.”

Amid these plays, the Asia-Pacific shares trade mixed whereas the US stock futures print mild losses. Further, the US Treasury yields trigger the US Dollar Index (DXY) rebound from a three-month low, up 0.32% intraday at the latest.

Moving on, updates from Bali and the Fedspeak will be crucial for the metal traders amid a light calendar.