Commodity prices tanked overnight on global recession fears, with the S&P GCSI off by more than 5% overnight:
The Baltic Dry Index lost nearly 3%, capesize sub-index (for iron ore and coal) is down 6%, but the big losses were reserved for energy prices: Brent crude oil lost more than 8%, taking it almost back to the start of year price:
But wait, there’s more. Copper and gold were both off more than 2%, with both metals having lost substantial ground since the start of the year:
This is all bad news for the Pacific Peso, as the Australian dollar absorbed the big rate hike from the RBA yesterday afternoon – barely moving as it was priced in – and then completely fell over last night, taking it below the 68 cent level against the USD:
Looking longer term, the Aussie is tracking commodity prices lower alongside its proxy iron ore in a terminal decline:
With the Federal Reserve likely to make a 0.75% rate hike this month, combined with growth fears as commodity prices are clearly forecasting, the Aussie will remain under pressure and unlikely to return above 70 cents against USD anytime soon.