“We made that previous call for the global industrial slowdown, and that meant you were going to see this slowdown in industrial materials price inflation, industrial commodity price inflation and the top line of the chart shows that.” Achuthan told CNBC’s “Trading Nation” on Thursday.
ECRI’s industrial materials price index shows the growth rate at its lowest level for around a year after a sharp increase from mid-2020 to early 2021.
“This weakness in industrial materials inflation, commodity price inflation, is also negative for commodity-related currencies like the Canadian dollar or the Australian dollar, because they are commodity-exporting countries and they depend more on commodity exports, ”Achuthan said.
The Canadian dollar and the Australian dollar, two commodity currencies, are closely linked to commodity price inflation, and the fact that they have started to reverse confirms the slowdown in industrial price inflation, did he declare. The Canadian dollar is closely related to oil prices, while the Australian dollar has a strong correlation with oil and gold.
This could portend problems for commodity trading as well as other sectors of the market, Achuthan said.
“A lot of people are excited about the rise of commodities. We’re saying you have to look the other way. It has ripple effects on commodity currencies against the dollar. And it has effects. I think that for other asset classes, what happens with some of these currencies can obviously have an impact on the commodities themselves, bonds, even stocks, “he said. declared.