The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Commodity market: two different views
2019-11-11 • Updated
Nowadays, commodities market is a highly discussed issue. The US dollar and prices of commodities are highly correlated. The weakening dollar always supports the rise of the commodity market and emerging market assets. That is why the significant fall of the dollar caused disputes between experts about the future of commodities.
The first group “guided” by DoubleLine CEO Jeffrey Gundlach is looking for the rise of the commodity market, expecting a weaker dollar at the same time
J. Gundlach based his opinion on a comparison of total returns of the S&P Goldman Sachs Commodity Index with the S&P 500 over the last several decades. So he concluded that there are points where commodities outperformed stocks, it led to a sharp increase in stocks, and vice versa. Now the S&P GSCI Total Return Index-to-S&P 500 Index ratio is at its lowest point, so it means that we will see a super rise of commodities this year.
Together with Jeffrey Gundlach, analysts at Goldman Sachs are calling for rising position for the next 12 months. Bank of America Merrill Lynch has raised the a-tonne copper price forecast from $7.140 to $7.700. Bloomberg Intelligence commodity strategists compare prospects of commodity market to the bull market of 2002-08. Hedge fund managers believe in strong oil and are building long positions.
These experts saw support of their decisions in rising prices of different commodities. For example, copper, palladium, platinum, and gold have grown in the last three months. The investment of assets reached the highest level in four years. Rising prices of crude oil helped analysts to form positive forecasts as well.
However, not all of the analysts are so positive about the perspectives of the commodity market.
Wells Fargo does not expect the continuation of the dollar fall, it considers the position of the dollar as neutral. The company denies the rise of the commodities prices, anticipating over-supply and range-bound prices at the commodity market for the next 10 years.
To sum up, we can say that it is quite difficult to forecast the future of the commodities prices because none of the experts could give enough number of supportive arguments for their positions. The price of the US dollar is volatile now, so we cannot be absolutely sure how it will affect the commodity market.
US oil exports reached a record last week at five million barrels a day, according to Energy Information Administration data…
The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?
Today, at 5:00 pm (GMT +2), the Bank of Canada will publish the Overnight Rate, which represents short-term interest rates, and is pivotal to the overall pricing of the Canadian Dollar in the global markets. Let's look at how the markets are faring ahead of the BoC rates release.