Achuthan told CNBC’s “Trading Nation” that we earlier called a global industrial recession, which meant you were going to see industrial material price inflation, industrial commodity price inflation and this slowdown in the industry. the top line of the graph. ” Thusday.
ECRI’s industrial materials price index is growing to its lowest level in almost a year after a sharp increase from mid-2020 to early 2021.
“The low inflation of industrial materials, the inflation of commodity prices, is also negative for commodity-related currencies such as the Canadian dollar or the Australian dollar, as they are commodity exporting countries and they are more dependent on commodity exports, ”Achuthan said.
He added that the Canadian and Australian dollars, two currencies linked to commodities, are closely linked to commodity price inflation, and the fact that they have started to decline confirms the decline in industrial price inflation. . The Canadian dollar is closely related to oil prices, while the Australian dollar has a strong correlation with oil and gold.
Achuthan said this could cause problems for commodity trading as well as other market segments.
“A lot of people are excited about the uptrend in commodities. We’re saying bluntly that we have to look the other way. It has an impact on commodity currencies against the dollar. And it has a ripple effect I think. For other asset classes, what happens with some of these currencies could obviously affect commodities, bonds and even stocks, ”he said.