Chicago 02/09/2016 - Copper futures erased previous gains to settle around Thursday's session with a stronger dollar capping the potential upside.
Copper for December settlement on the Comex division of the New York Mercantile Exchange inched up 0.05 cents or less than 0.1 percent to $2.0690. Trade has ranged from $2.0685 to $2.0855.
The red metal initially benefitted after the August US jobs report demonstrated that only 151,000 Americans joined the labour market, missing expectations of a 186,000 increase. The headline unemployment figure was unchanged at 4.9 percent, while average hourly earnings ticked up 0.1 percent.
The dollar saw an immediate selloff, but with the session approaching an extended holiday weekend, the greenback recovered and was last trading near a multi-week high of 95.87 on the dollar index.
The report had garnered significant attention after last week's symposium in Jackson Hole. Fed chair Janet Yellen and vice chair Stanley Fischer both reiterated that the economy was on pace for its eighth year of expansion and that a near-term rate rise could be appropriate.
Investors aren't so optimistic and prediction markets show another rate hike won't take place until 2017, according to the CME Group FedWatch.
Earlier this week, copper has tested fresh lows after a run of increases in LME copper inventories, raising fears of an economic slowdown in China. But prices rebounded after Chinese manufacturing data showed the country's industrial base was expanding and supply disruptions out of South American could be growing.
Chilean copper production could fall further in the coming months due to possible strikes at Anglo American's Los Bronces (437,800 tonnes per year) and Codelco's El Salvador (49,000 tonnes per year) following wage negotiations.
"The markets after taking days of downside pressure are now seeing so short covering which was inevitable," Malcolm Freeman, Director at Kingdom Futures, said. "Key to this was modestly better than expected data from China and unrest in Chile with partial shutdowns and threats of strike action."
"However this feels more like a correction within the current downtrend as opposed to a change of trend," he added.
In other data, trade balance in July came in at -39.5 billion, besting economic consensus of -43 billion. Factory orders in July grew 1.9 percent, off the estimate of a 2.1 percent increase.
Meanwhile in American markets, the Dow Jones industrial average and S&P were each up 0.3 percent, while the dollar strengthened 0.4 percent to $1.1159 against the euro.
In other commodities, light sweet crude (WTI) Oil futures on the Nymex recovered $1.40 or 3.2 percent to $44.56 per barrel, while the most active Comex gold contract was last trading at $1,326.0 per ounce, up $8.90.
(Editing by Tom Jennemann)