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Copper futures in New York closed with a steep decline as the dollar rallied lowering appeal of commodities ahead of the U.S. Federal Reserve meeting.

Today the dollar rose as much s 0.7 percent sending the euro to $1.5530.

The dollar was trading higher as traders speculate that the Fed period of rate cuts will come to an end after six reductions since September cutting bank borrowing interests to 2.25 percent from 5.25 percent to avoid a recession. The Fed will meet on Wednesday.

Copper futures for July delivery fell 4.8 cents or 1.22 percent to $3.8810 a pound on the Comex division of the New York Mercantile Exchange by the end of the trading.

The gains in the dollar also sent crude oil futures below $116 a barrel on Tuesday meaning a $3 dollar decline from an all time record high of $119.93 recorded yesterday.

A strong dollar reduces demand of commodities as a hedge against inflation.

Supporting prices, in Chile, a labor strike at Codelco the largest copper producer has prompted the shutdown of the third mine today, El Teniente which is the second largest. Codelco is the largest producer of the red metal in the world and its current situation is hurting supplies.

Copper inventories monitored in the London Metal Exchange fell 0.6 percent or 675 metric tons to 109,650 metric tons today signaling a weak metal availability.

Copper futures in the London Metal Exchange closed $83.50 up or 0.96 percent to $8,744 a metric ton.