Forexpros – Copper futures declined on Tuesday, falling to a one-week low after ratings agency Moody’s downgraded the credit ratings on six European countries, adding to concerns over the region’s ongoing debt crisis.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.820 a pound during European morning trade, shedding 0.51%.
It earlier fell by as much as 0.75% to trade at a session low of USD3.813 a pound, which was also the lowest since February 7.
Moody’s downgraded the credit ratings on six European countries, including Spain and Italy late Monday. France and Austria kept their top ratings but had their outlooks dropped to “negative” from “stable.”
Moody’s also cut its ratings on Portugal, Slovakia, Slovenia and Malta, while warning that it could downgrade the U.K., rekindling contagion worries.
The ratings firm’s actions follow similar moves by Standard & Poor’s and Fitch Ratings last month where multiple downgrades were made all at once.
Moody’s also noted the fragility of financial markets in Europe and the possibilities of future shocks to the system because of the crisis.
Meanwhile, investors continued to monitor developments surrounding Greece. The debt-laden country’s parliament approved a set of spending and wage cuts needed to secure the country’s EUR130 billion bailout package and avoid a sovereign debt default.
Attention now shifts to a meeting Wednesday of euro zone finance ministers, who will discuss the approval of the debt-laden country’s second bailout before a March 20 deadline.
Greece has a EUR14.5 billion bond repayment due on March 20 and requires the bailout funding in order to be able to make that payment and avoid a messy default.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
The news prompted investors to shun riskier assets, boosting demand for the safe-haven U.S. dollar. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.18% to trade at 79.22.
A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere on the Comex, gold for April delivery shed 0.3% to trade at USD1,719.65 a troy ounce, while silver for March delivery fell 0.8% to trade at USD33.45 a troy ounce.
Forexpros
