From the Financial Post:
Base metal prices, which are closely linked to Asia's fortunes, fell to a four-year low in May. Silver suffered as a result of economic sanctions imposed against India, a major exporter, when it began underground testing of nuclear weapons, the report says.
After a brief April rally, gold prices retreated to below $300 US an ounce as traders speculated about how much of the metal the European union's new central bank will hold.
All this has taken its toll on the Canadian dollar, which closed down 0.12 of a cent Friday at 68.63 cents US, less than half a cent away from January's historic closing low of 68.25.
Thiessen has made it clear the central bank is keeping its eye on the dollar but has yet to see a compelling reason to raise interest rates.
A rate increase in the U.S. is far from being a certainty, said Josh Mendelsohn, chief economist with Canadian Imperial Bank of Commerce.
As a major buyer of commodities, U.S. importers are paying low prices for metals, forest products and fuel and keeping inflation down, Mendelsohn said.
The Federal Reserve Board also faces the risk that raising U.S. rates could add to the instability in Asian markets, where money looking for a stable footing would surely flee, he added.
"You don't want to rock the boat at this point," he said. "I think they're going to hold their fire while all this volatility is going on."
Indeed, were it not for Asia, the Fed likely would have tightened its benchmark rate already by as much as half a percentage point, Mendelsohn said. |
