There has been a turnaround in most of those currencies and commodities, as we kick in 2009. The US dollar has also started this year quite on the firmer note. We have seen dollar trade at 3-weeks high against the Japanese Yen that was trading at 13-year lows, in the month of December, there is a pick and risk appetite for sure. We have also seen Euro decline on speculation that there could be more rate cuts coming in from European Central Bank (ECB) and that is putting pressure on that currency. The commodity currencies like Australian dollar is trading at 3-months high versus the US dollar, there is strength in New Zealand dollar as well. In the Asian market then South Korean Won, Pillippine peso, Indian rupee all of them have seen some strength, as the equity market here rebound.
But this is a data heavy week and you have lot of economic and macro economic numbers coming in; like the durable goods orders, US payroll, auto sales, factory orders and all these numbers will be giving us reaction in case of currencies and commodities.
We did see run up in case of crude prices but there is one space that saw real major gains was the base metal prices, last week has seen good buying coming back into all of this sector. The fundamental still are on the weaker side, the supplies are still at multi-year highs and demand is still not coming up but we have seen good buying happen across the board in case of base metal prices.
Shanghai zinc and copper were trading at 6% on the higher side in the Shanghai market. There is a bit of rebalancing on base happening from funds and there is some money being deployed in case of oversold metals and that is what is supporting the prices. Also buying in other commodity is supportive here. We saw a bit of US dollar weakness in the last week that also led to some gains into the prices. Also that Value -Added Tax (VAT) increase news coming in from China from 13% to 17% is what is supportive for the prices but there is not too much to read into this rally here. We saw 10% of gains in copper and zinc last week. Nickel at one time was up 33% in the last week but all of that maybe seen go down in case of profit taking this week. There is lot of data coming in this week and markets are expecting weakness to continue further at least till middle 2009 in case of this sector.
