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14 Jan 2015
Cheaper oil and lower commodity bad for the global growth – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale explains that cheaper oil and lower commodity might benefit the G5 economies but the net effect will be negative on the global growth.
Key Quotes
“Copper prices joined the commodity rout overnight, now trading 25% lower than this time last year. Cheaper oil and lower commodity prices in general, will boost G5 growth at the expense of weakening EM and resource-exporting growth.”
“The net effect on the global economy is probably slightly negative. Equity markets are much more aware of the relative losers and are weaker across the board after the US market reversed yesterday morning's strong open. The pick-up in volatility is almost as significant as the jittery nature of the market and while the Vix is above 20 today, I suspect it has further to rise.”
"CAD/JPY, meanwhile, will remain under the cost. However, the broader weakness in commodity prices is going to fuel further weakness cross the resource-exporting countries' currencies. So, AUD/JPY is the biggest G10 FX mover overnight and AUD/USD has reversed almost all of the last week's rebound."
"AUD/USD 0.80 remains, obviously, a major psychological support but in due course, this will break."
Key Quotes
“Copper prices joined the commodity rout overnight, now trading 25% lower than this time last year. Cheaper oil and lower commodity prices in general, will boost G5 growth at the expense of weakening EM and resource-exporting growth.”
“The net effect on the global economy is probably slightly negative. Equity markets are much more aware of the relative losers and are weaker across the board after the US market reversed yesterday morning's strong open. The pick-up in volatility is almost as significant as the jittery nature of the market and while the Vix is above 20 today, I suspect it has further to rise.”
"CAD/JPY, meanwhile, will remain under the cost. However, the broader weakness in commodity prices is going to fuel further weakness cross the resource-exporting countries' currencies. So, AUD/JPY is the biggest G10 FX mover overnight and AUD/USD has reversed almost all of the last week's rebound."
"AUD/USD 0.80 remains, obviously, a major psychological support but in due course, this will break."