30.09.2014 - Commodities bear looks to be digging in for long run
The commodities bear market looks entrenched. Strong supply-side responses, or successful economic stimulus by the European Central Bank, would be required to reverse price falls. Neither looks terribly likely. There is no dearth of reasons to explain a 12-per-cent decline in the Thomson Reuters-Jefferies CRB index of commodity prices in the past three months. First, there is the ascendancy of the U.S. dollar, whose index has hit four-year highs and looks likely to climb a lot further. Commodities are priced in the U.S. currency. So, as the greenback gains in value, fewer dollars should be required to buy them. While this relationship doesn’t always hold, correlations show the linkage is near-perfect at the moment...............................................Full Article: Source
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