Mumbai/India (Metalworld) – Copper edged higher recently trade after the release of stronger-than-expected US payrolls numbers for October, as investors holding short positions – or bets that prices will fall – scrambled to cover their positions. Aluminium also rose to a 10-week high on the news, which has helped allay fears that slowing economic growth would crimp demand for the base metals, which are widely used in construction and manufacturing.
The US economy added 166,000 jobs in October, nearly double the 85,000 jobs economists surveyed by Thomson's IFR Markets had expected from the survey of employer payrolls. The strong unemployment rate comes two days after the US Federal Reserve cut the key federal funds interest rate by a quarter points to 4.5 pct. But with the data seen benefiting the dollar as the day goes on, and with both rising inventories and weaker equity markets weighing on the metals complex, the rally could be short-lived.
Healthy data will give the Federal Reserve less scope to cut interest rates further in the short term. It would support a stronger dollar, which over the course of the day should weaken the base metals. Strength in the greenback makes dollar-denominated commodities such as base metals more expensive for holders of other currencies. Copper opened a touch weaker this morning after sliding to a seven-week low in November 2007 amid weaker equities, a stronger dollar and rising inventories.

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