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Copper and the Aussie dollar have been leading indicators of rising concerns about China’s slowing economy and mounting trade tension over the past month.

After touching a four-year high of $7,348 a tonne on June 7, copper has plunged 14 per cent, or more than $1,000 to $6,303 a tonne, and because Australia is a big copper producer the Aussie dollar has also been hit. It dropped 4.5 per cent against the dollar in the two weeks that followed copper’s June 7 peak.

Copper’s sell-off gathered pace last week, as Chinese speculators moved to dump the metal. Traders say the fall was exacerbated by the liquidation of a large long position in copper on the Shanghai Futures Exchange.

The moves in copper and the Aussie dollar came just days before China released economic data for May on June 14, which showed a tightening of credit. Escalating trade tension with the US has added to fears of a slowdown in the world’s second-largest economy.

“Metals’ demand from manufacturing is the most exposed to export demand and the most directly at risk of a global trade war,” Oliver Nugent, an analyst at ING, says. “Downstream consumers are scared to plan for future sales. You’re not going to buy a load of copper if they don’t think they will be able to export so many washing machines in the coming months and years.”

China is the world’s largest importer of copper, and Australia — the fifth-largest copper producer — is also a large supplier of other commodities such as coal and iron ore to China.

The price of copper is often seen as a bellwether for China’s growth, since the country consumes about 40 per cent of the world’s supplies of the metal.

The fall in copper and the Aussie dollar prefigured a decline in the renminbi, which has since fallen 3.6 per cent against the US dollar. That, in turn, makes the commodities that China imports more expensive, further reducing demand.

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