Copper futures slump to fresh 3-week low on stronger dollar

Investing.com - Copper prices fell to the lowest level in nearly three weeks on Wednesday, as a broadly stronger U.S. dollar dampened the appeal of the red metal.

On the Comex division of the New York Mercantile Exchange, copper for July delivery hit an intraday low of $2.823 a pound, the weakest level since April 30, before paring losses to trade at $2.828 during European morning hours , down 1.0 cent, or 0.35%.

A day earlier, copper tumbled 6.9 cents, or 2.37%, to close at $2.837. Futures were likely to find support at $2.788, the low from April 30, and resistance at $2.913, the high from May 19.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.3% to hit 95.67 early on Wednesday.

A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.

The greenback was boosted after data on Tuesday showed that U.S. housing starts in April rose to the highest level in nearly seven-and-a-half years, while building permits also jumped.

The upbeat data boosted hopes for a rebound in second quarter economic growth after a sharp slowdown in the first three months of the year.

Market players looked ahead to the minutes of the Federal Reserve’s April meeting, due for release later Wednesday, as well as a speech by Fed Chair Janet Yellen on Friday, for fresh indications on the timing of an initial rate hike.

Elsewhere, gold futures for June delivery inched up 30 cents, or 0.02%, to trade at $1,206.90 a troy ounce, while silver futures for July delivery tacked on 2.2 cents, or 0.13% to trade at $17.09 an ounce.

In the forex market, the euro fell to an intraday low of 1.1063 against the greenback, the weakest level since May 5.

The single currency plunged on Tuesday after senior European Central Bank policymaker Benoit Coeure said the bank is planning to speed up the pace of its bond-buying stimulus program before the summer, in order to avoid lower market liquidity in late July and August.

Concerns over the prospects of a Greek default continued to dominate market sentiment ahead of a critical June 5 deadline for Athens to reach a deal with its creditors.

Greece is scrambling to reach an agreement with its international lenders over economic reforms they say must be implemented before the final €7.2 billion tranche of the country's €240 billion bailout is released.

The debt-strapped nation is due to make a €305 million payment to the International Monetary Fund on June 5, but will default if a deal is not reached by then.