Commodity prices are under pressure after the Bank of Japan intervention in the currency markets resulted in a stronger US dollar.
Most commodities are priced in USD so the stronger the value of the dollar, the more expensive it will be to buy commodities.
Crude oil prices slipped by 1.3 percent since the Bank of Japan’s intervention this morning to a low of $92.24.
Gold prices slid 2 percent after Japan’s intervention in the currency market triggered a dollar rally causing the dollar to surge more than 1 percent against a basket of currencies.
Last week commodity prices rose following debt agreement reached at the EU Summit but prices soon began to slide at the end of last week as the euphoria faded and the focus turned to the upcoming G20 Summit. Concerns are growing that Europe is facing a difficult task of luring capital for the EFSF from other countries, namely China and Brazil. The EU is pledged to work “even more closely” with the IMF but needs to persuade the international fund that details of the debt plan will be laid out soon.
Over the weekend, Spain and Portugal called for the United States and other G20 powers to take action to help contain the fallout from the European debt crisis at the G20 summit, set for Cannes, France on November 3 and 4.