Copper just had a tough session. Now it looks like the selling has simply stopped.

A 2% drop on Tuesday gave way to a 0.1% wobble higher the next day. That's not a bounce - that's a market that ran out of steam.

Why the Dollar and the Fed Are Squeezing Metals

Industrial metals are priced in dollars, so a stronger greenback makes them more expensive for buyers using other currencies. That dries up demand.

At the same time, the Fed keeps signaling that interest rates will stay high to fight inflation. Higher rates make holding raw materials less attractive since a pile of copper pays zero interest.

Those two forces are crushing speculative bets on metals right now, according to a new Bloomberg report.

We break down what the Fed's next move means for commodities every morning in Market Briefs - five minutes a day, plus a free 45-minute investing masterclass when you join.

No One Is Betting on a Rally

Gao Ying, an analyst at Shuohe Asset Management, says base metals trading is now dominated by Fed monetary policy. "There are hardly any speculative long positions in base metals at the moment," Gao said.

That means almost nobody is placing big bets that copper will rise. The traders who usually jump in when prices dip have stepped aside entirely.

Without those speculative buyers, any recovery is fragile. A small uptick like the 0.1% we just saw doesn't signal a new trend - it signals a frozen market.

What to Watch

The dollar's next move is the key. If the Fed sounds even more hawkish, the greenback could keep rising and push copper lower.

If economic data weakens and rate-cut hopes return, speculative money could flood back in on the back of a weaker dollar, much like the dynamic that forced Goldman Sachs to slash their gold target on no Fed cuts.

For now, copper is drifting - and nobody wants to catch it.

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