The expected Federal Reserve rate increase on March 15 has market participants concerned about the impact of a potentially strengthening dollar as well as other potentially bearish global unfolding fiscal, monetary and trade events. These collective concerns have lead many market participants to start protecting 1st quarter gains as fears of re-emergence of global deflationary forces create commodity demand uncertainty.
Second, building European Union populist’s movement concerns over the next six-plus weeks and beyond have the potential to provide support to the U.S. Dollar and weaken ongoing global reflation efforts. The biggest European Union concern is the French Presidential elections on May 7. A win by Marine Le Pen would accelerate the unwinding of the European Union, though the unwinding should be orderly and take several years to accomplish.
Third, commodity market fundamentals in normal times would have commodity prices more depressed than today’s current prices, were it not for government and central bank stimulative economic momentum activities globally.
Click on the accompanying table to see this week's analysis.
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Disclaimer: For Educational Purposes.