Copper edged lower on Thursday, looking for direction from a speech by U.S. Federal Reserve chairman Jerome Powell expected later in the day and as U.S.-China tensions simmered.

Investors are betting the U.S. central bank will introduce a new policy framework to fight persistently low inflation as early as next month, a move that could weaken the dollar further and boost commodities.

“The market is on tenterhooks ahead of the speech by Powell,” said Saxo Bank analyst Ole Hansen.

The dollar is trading near a two-year low touched last week, which has helped support copper and other commodities.

Benchmark copper on the London Metal Exchange was down 0.2% to $6,577 a tonne by 1130 GMT, trading near a two-year high of $6,707 touched a week ago.

TRADE WAR: The United States and China traded jibes as military tensions grow between the world’s two largest economies, with the U.S. defense chief vowing not to “cede an inch” in the Pacific and China saying Washington was risking soldiers’ lives.

Rising tensions between the world’s largest two economies threaten economic growth and limit demand for metals.

CHINA GROWTH: Losses in copper were capped by data showing that profits at industrial firms in top metals consumer China grew for a third straight month in July and at the fastest pace since June 2018.

FUNDAMENTALS: Total copper inventories on the LME are near a 14-year low, pushing the premium for cash copper over the three month contract to $19.50 a tonne.

NICKEL: LME nickel hit its highest since November, up 1.5% to $17,810 per tonne, on concerns over supplies from Indonesia after flooding halted some production and worries about supplies for China’s stainless steel mills.

But high nickel inventories in China and in LME-approved warehouses showed the market was well supplied.

OTHER PRICES: LME aluminum was steady at $1,779 a tonne, zinc was up 0.5% to $2,479, lead fell 0.3% to $1,972 while tin gained 0.8% to $17,695.