Most commodity prices fell this week even before the strong US payrolls data raised expectations of early Fed tightening and further dollar strength. While recognising that both developments have negative implications for commodity prices, the robust US economic growth that justifies raising rates from what are, after all, emergency lows should also be positive for commodity demand. What’s more, we expect the Fed to move cautiously and US interest rates to remain relatively low by past standards. Meanwhile, the Bank of England and the ECB confirmed this week that monetary policy would stay ultra-loose in Europe.
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