Depressed commodity China Demand Worries

JAKARTA: Commodity prices trimmed most severe in the five days since July 2009, triggered fears of reduced demand from China pascamelambatnya country's economic growth.

On the other hand, the U.S. dollar also strengthened against the basket of six other currencies by 0.9%, thereby reducing the attractiveness of the majority of commodity contracts denominated in U.S. dollars.

Market volatility experienced transition issues from a focus on the problem of monetary stimulus, called quantitative easing (QE) of the Federal Reserve continued, returning to Ireland's debt crisis and the euro zone. In addition, the potential of China's upward trend in interest rates has hindered the rate of strengthening commodity prices.

A number of commodity indices such as the Thomson Reuters / CRB index of 19 basic commodities, trimmed down 3.2% or minus 9.8 points to 296.22, its lowest level since 22 Oktover 2010. UBS Bloomberg CMCI Index is also trimmed down 57.83 points to 1434.13, the S & P GSCI minus 18.47 points to 565.66 and Rogers Intl index minus 130.12 points to 3455.38.

Nickel, wheat, and aluminum trimmed down 6.6% to lead the decline in the index Reuters / Jefferies CRB corrected 3.2%. This decline continued correction sepekannya to minus 7.2%, biggest weekly decline in 2 years. Price also corrected a number of other commodities, like copper minus 4.9%, biggest decline in 4 months, to U.S. $ 3,731 per pound in New York.

Correction in commodity prices was triggered by concerns over the economy in China.

Analyst Valbury Asia Futures Rekhmen said China's economic data releases showed increased inflation to its highest level for 25 years, driving the market outlook on the prospects of further interest rate hikes. This condition is feared to dampen Chinese demand for commodities.

China is the world's biggest consumer of commodities, market concerns about the prospects of the country's economy will trigger a reaction in the commodities market, especially after the sharp rate of increase in some time earlier.

On the other hand, continued Rekhmen, the U.S. dollar managed to score the highest increase in the 6 last week against the euro, following the mengerucutnya concern at Ireland's ability to repay its bonds are also feared to have an impact on the European Union in general.

"Conditions in Ireland was sparked investors to hunt down the U.S. dollar as the status of safe-haven asset," he said.

Naikknya product yields on U.S. treasury also mendukug performance of U.S. dollar against the yen, which then sustains the greenback to its highest level since 5 October, which rose 0.6% to 83.01 yen.

In addition to commodities, stock indices in the global market also trimmed down for the seventh day, the longest decline since January. The MSCI World Index trimmed down 1.9% in New York, the biggest drop since August 11. The broader Standard & Poor's 500 slipped 1.6% and Shanghai Composite Index minus 4%.

By                    : Rekhmen (Analyst Valbury Asia Futures)

Source              : Bisnis Indonesia

Translated         : Using google Translater facilities