Copper prices fell on Wednesday despite strong Chinese economic data and a weaker U.S. dollar against most major currencies.

The metal had posted marginal gains on the London Metal Exchange but continued to trade below the key psychological threshold of $10,000 per ton, with expectations building that the Federal Reserve will cut interest rates at its meeting this month.

On the London Metal Exchange, three-month copper futures inched up 0.1% to $9,988.5 per ton as of 12:47 p.m. Mecca time.

Copper briefly touched $10,038 — its highest level since March 26 — at the opening of electronic trading, which was delayed by 90 minutes due to an earlier technical glitch.

Zinc climbed 0.7% to $2,884 per ton after hitting $2,900 earlier, its highest since March 28. Meanwhile, aluminum slipped 0.1% to $2,617 per ton.

Government data released Wednesday showed that China’s services sector activity grew at its fastest pace in 15 months in August, according to a private survey.

Elsewhere, the U.S. dollar index fell 0.3% to 98.07 by 16:19 GMT, after reaching as high as 98.6 and as low as 98.03.

In U.S. trading, copper futures for December delivery declined 0.5% to $4.61 per pound as of 16:15 GMT.

Bitcoin held steady near $111,000 on Wednesday after reclaiming its 100-day exponential moving average in the prior session.

The recovery in the world’s largest cryptocurrency by market capitalization has been supported by renewed institutional demand and corporate accumulation, which lifted sentiment. At the same time, growing expectations of a 90% chance that the Federal Reserve will cut interest rates in September have fueled risk appetite, underpinning Bitcoin’s rebound.

Rate cut bets drive risk appetite

Bitcoin began the week on a mildly positive note, consolidating around $111,100 midweek after ending a three-week streak of lower lows from its August record high at $124,474.

According to CME’s FedWatch tool, markets are pricing more than a 90% probability of a 25-basis-point rate cut at the Fed’s September 17 policy meeting. Investors are also anticipating at least two additional rate cuts before the end of 2025, which could provide further support for risk assets such as cryptocurrencies.

Traders are now focused on key U.S. economic data this week, including the JOLTS job openings report on Wednesday, ADP private payrolls and ISM services PMI on Thursday, and Friday’s nonfarm payrolls report — all critical inputs shaping Fed policy and Bitcoin’s trajectory.

Institutional demand supports recovery

Spot Bitcoin ETFs recorded $332.76 million in inflows on Tuesday, according to SoSoValue.

On the corporate front, Nasdaq-listed CIMG Inc announced it raised $55 million through the sale of 220 million common shares, securing 500 Bitcoin as part of its long-term reserve strategy. Japanese investment firm Metaplanet also boosted its holdings with an additional 1,009 Bitcoin purchase on Monday, bringing its portfolio to 20,000 BTC. Separately, Michael Saylor announced an increase in preferred STRC share distributions from 9% to 10%, reinforcing his company’s strategy to leverage its sizable Bitcoin reserves.

Bridgewater Associates founder Ray Dalio told the Financial Times that cryptocurrencies now represent a “limited-supply alternative currency,” adding that rising U.S. dollar issuance or weakening demand could make crypto more attractive. He warned that most fiat currencies burdened by high debt risk losing their store-of-value role, as seen in the 1930s, 1940s, 1970s, and 1980s.

Concerns linger despite rebound

Glassnode data flagged signs of caution, noting Bitcoin is trading near the short-term holder cost basis — historically a battleground between buyers and sellers.

The report highlighted fading price momentum, with the Relative Strength Index (RSI) entering oversold territory, reflecting weak buying conviction. However, such low RSI levels have sometimes preceded stabilization or short-term reversals.

In futures markets, positioning remained cautious, while options activity contracted with declining open interest and narrowing volatility spreads. Still, the 25-delta skew climbed above historical norms, signaling strong demand for downside protection and a defensive tilt among options traders.

Bitcoin price outlook

Bitcoin closed Tuesday above its 100-day EMA at $110,723 and was steady near $111,100 in Wednesday trading.

If recovery momentum continues, gains could extend toward daily resistance at $116,000.

On the technical side, RSI climbed to 45, approaching the neutral 50 mark, suggesting easing negative momentum. Meanwhile, MACD lines are nearing a bullish crossover as red histogram bars shrink, reinforcing the potential for a new upward wave.

Oil prices fell by around 2% on Wednesday ahead of a closely watched OPEC+ meeting at the end of the week, with expectations that producers will discuss a fresh output hike for October.

Brent crude dropped $1.16, or 1.7%, to $67.98 a barrel by 10:30 GMT, while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2%, to $64.31.

Sources told Reuters that eight members of OPEC and its allies in the OPEC+ coalition will discuss a possible additional increase at Sunday’s meeting, as the group seeks to reclaim market share.

Any new hike would mark the start of unwinding a second layer of output cuts of around 1.65 million barrels per day, equivalent to 1.6% of global demand, more than a year ahead of schedule. The alliance had already agreed to raise output targets by 2.2 million barrels per day between April and September, along with an additional 300,000 bpd for the UAE.

However, actual increases have fallen short of planned levels, as some members worked to offset past overproduction while others struggled to lift output due to capacity constraints.

Oil prices had closed more than 1% higher in the previous session after the United States imposed new sanctions on a shipping network led by an Iraqi-Kittitian businessman, accusing it of disguising Iranian oil as Iraqi crude.

In the U.S., a preliminary Reuters poll on Tuesday showed crude stocks fell last week, alongside declines in distillate and gasoline inventories. Three analysts surveyed expected crude inventories to have dropped by an average of 3.4 million barrels in the week ending August 29.

But weaker economic data capped gains, as the U.S. manufacturing sector contracted for a sixth consecutive month, with business confidence and activity dampened by tariffs imposed by President Donald Trump, pressuring the outlook for oil demand.

The U.S. dollar held steady against other major currencies on Tuesday, supported by safe-haven flows. The U.S. economic calendar includes job openings and factory orders data for July. Later in the session, markets will watch the Federal Reserve’s Beige Book report and comments from policymakers.

By 12:09 GMT, the dollar index was unchanged at 98.3, after reaching a high of 98.6 and a low of 98.1.

U.S. Dollar: Bond Market Turmoil Threatens Recent Gains

The dollar’s latest rally looks more like a nervous spasm than a sustainable shift. The move was less about U.S. fundamentals and more about turmoil in global bond markets. Long-term bond prices from London to Tokyo sold off sharply, sending yields to multi-decade highs and pulling the dollar upward in the process.

Beneath this volatility, however, fundamentals remain tilted against the greenback: the U.S. labor market is showing signs of slowing, Fed Chair Jerome Powell has signaled a bias toward prioritizing employment over inflation, and the central bank is preparing to ease.

Friday’s U.S. jobs report is the key weight on the market’s balance. If it confirms stagnation, the reaction is predictable: traders will reinforce bets on larger near-term cuts, the yield curve will steepen further, and global bond desks will reposition. The report, therefore, has less to do with payrolls themselves and more with the shape of the yield curve and the credibility of the Fed’s pivot.

The open question is where the dollar will settle. Will it continue to ride the wave of global bond selling, drawing temporary support from safe-haven flows? Or will it realign with two-year U.S. Treasury yields, the traditional compass for FX traders? If cuts are aggressively priced in, two-year yields will bear the burden, potentially undermining the dollar’s base. For now, as long as global bond volatility remains elevated, the dollar can draw oxygen from safe-haven demand.

In short, the jobs report is pivotal. Weak data would set the stage for a series of easing steps, steepening yield curves further and eroding the dollar’s link with two-year yields. Only if this shift sparks broader risk aversion can the dollar hold on to its recent gains. Until then, the currency seems stuck between short-end U.S. yields and global bond market turmoil.

The author adds: “I see trimming dollar shorts as tactical, not the start of a broad squeeze higher — perhaps toward 1.15 — though I wouldn’t hesitate to buy dips. Yesterday’s dollar rally, sparked by heavy selling in UK Gilts and French OATs, lacked broad conviction.”

He notes that debt concerns outside the U.S. may have prompted some investors to reduce exposure, but argues this fuel is insufficient for a sustained dollar rally. “I’m watching dips, but patience is key; levels below 1.1625 are rare, and I’d rather wait than chase until the market forces my hand.”

The labor story extends beyond nonfarm payrolls, as Trump’s appointment of a new Bureau of Labor Statistics head raises questions about the credibility of official data. That places greater weight on secondary indicators such as JOLTS, which shows job vacancies declining but still well above pre-COVID averages. If layoffs continue to fall, policy repricing may be slower; if they start to rise, Fed easing could accelerate. In either case, Powell has made clear that risks are tilted toward employment, not inflation.

For the euro, valuation models point to fair value closer to 1.18, suggesting EUR/USD remains undervalued even with political risks in France. French OAT weakness may limit enthusiasm, but unless the crisis spreads more broadly, the impact on the single currency looks largely absorbed. Meanwhile, a stronger-than-expected 2.3% core CPI reading yesterday lifted two-year euro swaps and briefly eased 2025 rate-cut expectations. Still, ECB officials continue to signal they are “well positioned,” implying any policy shift will remain data-driven.

In Japan, global bond market turmoil extended further. Thirty-year JGB yields hit a record 3.28%, while 20-year yields reached levels not seen since 1999. These moves reflect politics as much as numbers: Prime Minister Fumio Ishiba faces pressure after a poor July election result, and investors fear a populist successor could boost fiscal spending and pressure the BoJ to slow rate hikes. Tomorrow’s 30-year bond auction will be a key test, with insurers showing little appetite for long maturities, preferring shorter tenors.

Altogether, the U.S. dollar looks suspended in mid-air rather than grounded on firm fundamentals. Safe-haven demand tied to foreign debt concerns cannot mask the opposite pull from the Fed’s pivot toward easing. The euro remains undervalued, the yen hostage to politics, and global bonds the fault line running beneath all assets.

The author concludes: “Dollar momentum looks fragile, ready to crack once the jobs data hits. Until then, I’ll keep most cash on the sidelines — ready to sell into deeper dollar rallies if they reach my levels, and chase dollar weakness only when the market itself opens the door.”