Morning Report Monday 1 December 2014
On Friday night, oil continued its slide south. Gold and silver joined in and copper also fell over 3%, pulling the $A back to 85 cents. The first and most obvious observation I can make is the $A would be falling significantly harder if we did not have massive QE from the US, Europe and Japan. However, market do eventually go to fair value and I am starting think the $A that may trade towards 60c, not the obvious 80c. Let’s take a snapshot look at the individual markets mentioned above.
Crude Oil has fallen over 38% in the last 6 months, while I do feel the acceleration part of this fall is behind us after OPEC’s decision, it’s obvious to me that markets should prepare for these lower prices to remain for a reasonable period of time (chart 1).
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