Copper rallies on weak dollar - The Globe and Mail

quotes from Article by:
Chris Kelly and Humeyra Pamuk
New York, London — Reuters Last updated on Wednesday, Sep. 16, 2009 05:53PM EDT

Copper rallied Wednesday to its loftiest level in a week as the U.S. dollar sank to a one-year low and more positive U.S. economic reports drove bullish momentum.

U.S. Federal Reserve Chairman Ben Bernanke Tuesday said the U.S. recession was probably over. Opimism about the economy created more enthusiasm ...for copper...as dollar sank to one-year lows against the euro and a basket of currencies Wednesday, making dollar-priced metals cheaper for non-U.S. investors.

Is copper more of a dollar story than anything else, as some traders stated?

Despite expectations of a recovery, copper inventories reflected poor demand, capping gains in prices.

“The bullish impact arising from favourable macro data and the weaker dollar seem to be bumping against the weaker fundamentals ... typified by rising LME stocks and a deceleration of Chinese import growth,” said analyst Edward Meir at MF Global in a research note.

LME copper inventories rose :
LME copper inventories rose 675 tonnes on Wednesday to 323,225 tonnes, up nearly a quarter since July. Copper imports to China were down for the second month in a row in August, falling 20 per cent from July.

...but countered by:

Fundamentally, the picture for copper is very positive,” said Mike Frawley, global head of metals with Newedge Financial Inc. in New York.“Physical production is finally balanced with demand. Physical availability is less than two weeks of supply ... couple that with the perception that the global economy continues to improve and the weaker U.S. dollar, and we have very strong fundamentals,” he said.