It been an unusual week for commodities with USD LME prices falling and surprisingly the AUD/USD rising. Normally we see these two indices fall and rise together and often provide a natural buffer in a falling market, but unfortunately this hasn’t occurred this week. It has been reported in the press that central banks from Kazakhstan to Switzerland have been buying up the local dollar and investing in Australian government bonds, one of the few liquid triple-A sovereign debts left. It has also been reported that the uber-conservative Bundesbank will reportedly start adding the Australian dollar to its reserves later this year also, all of which is expected to keep the currency above parity or push it even higher.
Its almost as strange as the 16 year female Chinese swimmer Yi Shiwen who can swim 50 metres faster than American Ryan Lochte, an eight time Olympic medallist…
NEWS ANALYSIS – Metal prices melt in the heat of the financial crisis The problem is squeezing margins and has left some questioning where it will end, writes Jack Farchy How low can they go? As economic gloom sets in, that question is increasingly dominating the minds of metals investors.
Aluminium, used to build aircraft, cars and to make fizzy drinks cans, has tumbled 20 per cent since March and at $1,899 a tonne yesterday was close to its lowest since late 2009. Nickel, used to make stainless steel, has fallen 30 per cent since February to touch a three-year low of $15,450 a tonne. Even iron ore, a favourite of commodity bulls, has fallen 22 per cent since April.
For some time, traders and investors have been trying to pick the bottom of some of the markets. James Luke, commodity analyst at CICC, a Chinese investment bank, says: “I can remember when people asked what the support level was for nickel and everyone said $20,000″ – a level last seen at the end of February.
The trade is based on the concept of the “marginal cost of production” – or the price at which the highest-cost producers of the metal start to lose money. According to traditional theory among metals analysts, if prices stay for long enough at this marginal cost, the high-cost producers will curtail their output, supporting prices.
As Sucden Financial, a leading metals broker, noted last week: “Most base metals prices, apart from copper, have fallen to levels that are squeezing margins at higher-cost producers, which increases the chances that more production cuts will be made.
Joke of the week – placed at bottom to see of anyone reads this far God and the Devil discuss an Engineer Although locked in fierce competition for what seems like forever, God and the Devil meet once every week for coffee just to catch up with each other. One week they’re in heaven and the next they’re in hell. When it was God’s turn to host last week, the Devil was whistling a happy tune as he walked through the gates and wore a huge smile as he plopped down in the golden chair. As he poured a cup, God said, “You look pretty pleased with yourself.” “Yeah,” said the Devil, “Things are really looking up since I got that engineer last week. He’s put in escalators and flush toilets, and he even found a way to control the heat in those old furnaces. I’ve been meaning to thank you for turning him away up here.” God looked stunned, and almost spilled coffee into the saucer. “You know that you’re not supposed to get any engineers,” God said. “Peter was breaking in some new help at the gates last week, and they must have made a mistake. Just send him back up and we’ll straighten it out.” But the Devil just chuckled and said, “No. I think I’ll keep him. He was talking about looking into better ventilation this week. I can see why you keep them all for yourself.” “Send him back,” demanded God “No,” smirked the Devil. God thundered, “Send him back, or…” “Or what?” the Devil asked. “Or I’ll sue,” finished God. The Devil chuckled again. “Where are you going to get a lawyer?”