Copper prices dropped sharply during Thursday’s trading session, weighed down by a stronger US dollar and market reaction to the latest tariff measures introduced by President Donald Trump on the industrial metal.

The White House announced in an official statement on Wednesday that President Trump had signed a proclamation to impose a 50% tariff on certain copper imports, citing national security concerns.

According to a fact sheet released by the White House, the measure targets semi-finished copper products and derivatives with high copper content, effective August 1st.

The statement clarified that the new tariffs will not apply to copper scrap or primary input materials used in copper production, such as ores, concentrates, mattes (partially smelted products), cathodes, and anodes.

This move follows a Section 232 investigation initiated in February at the direction of President Trump.

In addition to the tariffs, the presidential order calls for measures to support the domestic copper industry, including requiring US producers to sell 25% of high-quality copper scrap generated within the country into the domestic market.

Meanwhile, the US Dollar Index rose slightly by less than 0.1% to 99.8 points at 16:07 GMT, reaching a high of 100.1 and a low of 99.5.

As for copper trading, September futures contracts dropped sharply by 21.8% to $4.36 per pound at 16:06 GMT in US trading.

Bitcoin prices rose on Thursday morning, supported by gains in US stock futures, despite the Federal Reserve deciding to keep interest rates unchanged in its latest monetary policy meeting.

At the same time, a new report issued by the White House on digital assets raised fresh questions, as it offered few details regarding the long-promised “strategic Bitcoin reserve.”

The world’s most popular cryptocurrency rose by 1% over the past 24 hours, maintaining levels above $118,000 (£89,026). Investor sentiment also improved in broader markets, with futures for the Dow Jones, S&P 500, and Nasdaq indices rising by 0.29%, 0.9%, and 1.31% respectively in pre-market trading.

As for alternative cryptocurrencies (altcoins), performance was mixed following the Fed’s decision. Ethereum (ETH-USD) rose by 1.1%, while Solana declined by 0.4%.

The Fed holds rates and monitors tariff impact

During the Federal Open Market Committee (FOMC) meeting on Wednesday, the US central bank decided to keep the main interest rate within the 4.25% to 4.5% range. Fed Chair Jerome Powell adopted a cautious tone, stating that future decisions will depend on upcoming economic data — particularly as the effects of President Donald Trump’s newly imposed tariffs begin to show in the economy.

September rate cuts now less likely

Following Powell’s remarks, expectations for a rate cut in the September meeting dropped sharply. According to market data, the odds of a cut fell to just 40%, down from 63% before the announcement.

Powell noted that tariff increases have started to affect consumer prices for certain goods, but did not commit to any action in September. He said the Fed will monitor developments over the next two months.

Historically, rate cuts have been a positive factor for cryptocurrency markets, as they reduce the appeal of traditional savings and push investors toward riskier assets like Bitcoin and altcoins.

Criticism of Fed policy: “They’re chasing a phantom inflation”

However, not all market participants were convinced by the Fed’s stance. Louis Navellier, Chairman of Navellier & Associates, criticized the central bank’s approach in a note to investors: “The Fed says the economy is weak, but not weak enough to warrant a rate cut yet.” He added: “They claim the labor market is very strong, even though most of that strength is due to seasonal adjustments.”

Navellier pointed to ongoing deflationary pressures — including China’s economic slowdown, global weakness, and inventory buildup in anticipation of tariffs — saying: “The Fed is chasing a phantom inflation that doesn’t exist.”

Navellier praised Powell’s statement that any tariff-related inflation could be “a one-time event that will not repeat.” He added: “I’m glad he said that.”

Navellier called for aggressive rate cuts starting in September: “Frankly, the Fed should cut rates six times. It should start in September, cut again in December, and follow that with four more cuts next year. The rate should reach 3%.”

White House report on digital assets: Strategic Bitcoin reserve still unclear

In a notable development, the Trump administration on Wednesday issued its most comprehensive report yet on its digital asset policies. The report, published by the White House Digital Assets Working Group and spanning 163 pages, outlined the government’s evolving regulatory framework in this area, including banking infrastructure, anti-money laundering standards, and cross-border transactions.

However, despite high anticipation from the industry, the “strategic Bitcoin reserve” was mentioned only once in the report — without any substantive details about the nature or goals of the project.

Nevertheless, senior administration officials stated that the infrastructure for this reserve is under development, adding that more details will be announced soon.

Oil prices fell on Thursday as investors assessed the supply risks stemming from US President Donald Trump’s push to quickly reach a resolution to the war in Ukraine by imposing additional tariffs, while a surprise buildup in US crude inventories also weighed on prices.

Brent crude futures for September delivery — set to expire on Thursday — dropped by 60 cents, or 0.8%, to $72.64 a barrel by 09:55 GMT. US West Texas Intermediate (WTI) crude for September delivery also fell by 58 cents, or 0.8%, to $69.42.

Both benchmarks had recorded 1% gains in Wednesday’s trading.

Harry Tchilinguirian of Onyx Capital Group said: “The market is reacting in advance to the implications of President Trump’s statements, then remembering that these policies could suddenly shift if he manages to strike a deal.” He added: “We are now seeing a reassessment until things become clearer.”

Trump had announced he would begin imposing measures on Russia, including 100% secondary tariffs on its trading partners, if no progress is made in ending the war in Ukraine within 10 to 12 days — a shortening of the previously set 50-day deadline.

The US also warned China, the largest buyer of Russian oil, that it may face steep tariffs if it continues its purchases.

Meanwhile, the US Treasury Department on Wednesday announced new sanctions on more than 115 individuals, entities, and ships linked to Iran, in an escalation of the “maximum pressure” campaign pursued by the Trump administration, following the bombing of Iranian nuclear sites last June.

Regarding supply, the US Energy Information Administration reported on Wednesday that US crude inventories rose by 7.7 million barrels to 426.7 million barrels in the week ending July 25, driven by a drop in exports. Analysts had expected a decline of 1.3 million barrels.

As for gasoline stocks, they fell by 2.7 million barrels to 228.4 million barrels, far exceeding expectations for a 600,000-barrel drop.

Toshitaka Tazawa, an analyst at Fujitomi Securities, said: “The US inventory data showed an unexpected increase in crude, but the larger-than-expected decline in gasoline stocks supported the view of strong demand during the driving season, leading to a neutral effect on the oil market.”

The US dollar rose against major currencies on Wednesday after the Federal Reserve kept interest rates unchanged, in line with market expectations, despite pressure from US President Donald Trump.

The Federal Open Market Committee voted 9 to 2 in favor of keeping the benchmark overnight interest rate in a range between 4.25% and 4.50%, marking the fifth consecutive meeting with no change.

Vice Chair for Supervision "Michelle Bowman" and Board Governor "Christopher Waller" — both Trump appointees — dissented, expressing a preference to cut interest rates by 25 basis points.

In a press conference following the decision, Federal Reserve Chair Jerome Powell said he expects the process of understanding the impact of tariffs on inflation to be “slow.”

“Otto Shienhara,” Chief Investment Strategist at “Mesirow Currency Management” in Chicago, said: “The Fed’s decision to leave interest rates unchanged wasn’t a surprise, but the market noted the two dissenting votes in favor of a cut.”

He added: “The dollar remained well supported following strong economic data this morning and the Fed announcement, while the market viewed the September meeting as a near coin toss.”

Investors’ conviction that Trump’s tariffs and excessive spending would cause long-term damage to the dollar and US equities is beginning to crumble, signaling tough times ahead for European and emerging market assets that previously benefited from this belief.

After recording its worst first-half performance since 1973, the dollar is now on track to post its first monthly gain in 2025, following the Fed’s refusal to cut interest rates, stronger-than-expected US growth data, and easing fears of a trade war.

This trend puts what is known as the “rest-of-world trade” — which hinges on declining confidence in US assets but is actually driven by investors’ desire to reduce exposure to a weakening dollar — at risk, according to investors.

On Thursday, futures trading pointed to US equities posting daily gains exceeding 1%, which could end the outperformance that European stocks have enjoyed this year, while the euro and emerging market assets in Asia fell sharply.

“Shaniel Ramji,” Co-Head of Multi-Asset Management at “Pictet Asset Management,” said: “Being bearish on the dollar and the US is one of the biggest positions among investors.” He added that he is preparing to increase his dollar exposure after being “close to zero,” expecting US economic trends to begin outperforming their European counterparts.

He pointed out that a broad dollar recovery could halt the major market trends of 2025.

With US rate cut expectations declining on Thursday, some investors said the Fed may support the idea of a dollar rebound to offset the impact of higher import costs from tariffs on consumer price inflation.

As of mid-July, the conviction that the dollar would decline was the most crowded trade among global fund managers, according to Bank of America research.

This large anti-dollar bet — estimated at $18 billion and considered the largest trade in FX markets — came under pressure after the euro, which had risen to $1.1789 earlier this month, fell to $1.1401 after the Fed meeting on Wednesday.

The single European currency, which recorded its best half-year performance in its 26-year history during the first half of the year, is now heading for its biggest monthly drop against the dollar since May 2023.

On Thursday, the MSCI Emerging Markets Asia stock index fell more than 1% to a two-week low, while the MSCI Emerging Market Currency Index was headed for its first monthly loss of the year.

Meanwhile, the British pound was on track for a weekly loss of 1.6%, potentially marking its worst weekly performance since the UK market turmoil in January.

“Michael Nezard,” Head of Multi-Asset at “Edmond de Rothschild Asset Management,” said: “We are seeing a shift toward US equities, a shift in FX markets, and a shift in momentum.”

He cited the trade framework agreement reached on Sunday between Washington and Brussels as one of the main reasons behind this trend, stating that he does not expect it to last through the end of the year, and added that he would buy the euro when it nears the $1.14 level.

However, “Bettina Edmonston,” Portfolio Manager at “River Global,” said the strength of the dollar would help curb US inflation, meaning that the Fed’s “put” — where the central bank intervenes to support falling markets with monetary policy — may have been reactivated in favor of the dollar.

She added: “I don’t expect interest rates to fall, which logically suggests the dollar will strengthen.”

Temporary?

“Monica Defend,” Head of the Investment Institute at “Amundi” — the largest asset manager in Europe — said she still holds her long-term view that the dollar is on a path of decline, due to Trump’s borrowing plans and ongoing attacks on the Fed’s independence.

But she added she is prepared to revise that view “if US growth surprises to the upside,” should the trend continue.

She said: “US exceptionalism may persist, not necessarily at the macro level, but more in the stock market.”

For his part, “Mark Ellis,” Chief Investment Officer at “Nutshell Asset Management,” said he is not certain that the US dollar and US equities will continue to rise together in August, traditionally one of the most volatile months for markets.

He added: “The end of this week marks a good time to reduce risk, and I’ll be more cautious as we enter the usual period of summer volatility and weakness.”

Meanwhile, “Emmanuel Cau,” Head of European Equity Strategy at “Barclays,” issued a different warning in a client note dated July 30.

He noted that trend-following hedge funds — known as CTAs — whose trades are a barometer of market sentiment, had closed their bets against US bonds and cut exposure to European equities.

He concluded by saying that “any more sustained dollar rebound would be one of the most painful challenges for global investors going forward.”

In trading, the US dollar index rose by 0.1% as of 11:56 GMT to 99.8 points, recording a high of 99.9 and a low of 99.5.