I hate to cop out but it is just too early to say if today’s pullback in commodity prices and commodity currencies is the beginning of a trend or merely a blip in a powerful uptrend.
The fact that even this late in the day the market has still not been able to pin the pullback on a particular catalyst suggests to me we have more room to run in the near-term.
There are lots of anecdotes of possible catalysts but they’ve all been around for a while. China’s economy appears to be slowing a bit, the US fiscal policy may tighten a bit in 2011, the Queensland floods may prompt the RBA to hold rates steady…
Any and all may be having an impact. And with the market massively overweight all things commodities linked, the pullback could be fierce. But as we’ve seen so many times in the past, the roadside is littered with the rotting corpses of traders who tried picking a top in gold, in AUD, in copper…
Near-term, keep an eye on the 0.9985/90 area in AUD/USD, on the 1.0070 area in USD/CAD and 1360 in gold…all would suggest near-term tops are in, if broken.
