Copper jumps on softer dollar, awaits Fed decision

By Manolo Serapio Jr.

MANILA (Reuters) - A weaker U.S. dollar pushed copper nearly 2 percent higher on Wednesday as investors waited for the outcome of the Federal Reserve's two-day meeting later in the day.

Economists expect the U.S. central bank to keep interest rates on hold and dampen expectations for rate hikes this year, sending the dollar sharply lower against the euro and other major currencies.

"People don't have a very clear view at the moment so what the Fed will say tonight is quite important for currencies and obviously, it will definitely affect commodities," said a Shanghai-based trader.

A weaker dollar makes dollar-priced commodities cheaper for holders of other currencies, and dollar backsliding helped lift the benchmark Reuters-Jefferies CRB Index of 19 commodity futures by 1.5 percent on Tuesday.

Benchmark Shanghai copper jumped 720 yuan, or 1.9 percent, to close at 39,060 yuan, adding to a 170 yuan gain on Tuesday.

Copper for delivery in three months on the London Metal Exchange gained $93 to $4,898 a tonne by 0701 GMT.

Copper has risen around 60 percent in London and 64 percent in Shanghai, year to date, on sturdy Chinese buying which is likely to lose steam as the lean season starts.

"Demand for metals like copper is traditionally weak in July and August when construction slows down in China," said analyst Shao Hebin at Great Wall Futures.