Commodities have come off the boil in the wake of the ISM data despite signs of life from the US economy.
Why?
Because so much of the bull run in commodities has been based on financial speculation linked to quantitative ease and very little has been related to supply/demand dynamics.
We’ve seen this pattern before (remember July 2008 anyone?). Commodities soared and the dollar slide as the market correctly priced in easing from the Fed as far as the eye could see. What they did not anticipate was a full-scale global financial panic.
Too early to say what the catalyst will be this time (less aggressive Fed?) but the bubble is eerily similar if not quite as large.
EUR/USD has dipped to fresh session lows in the 1.3870s after dipping below 1.3880 support. 1.3705/10 is next support of note.
