Ag Analyst: Commodities to Remain Favorable with Fed's Cheap Dollar Policy
Agricultural analyst Jason Britt has made a note saying that traders who are short or bearish on commodities should be careful, as the Fed stated they will likely leave interest rates unchanged for an extra year, until 2014.
Britt is president of Central States Commodities, a full-service brokerage for futures and options trading, so his opinion should be taken into account. Leaving interest rates unchanged until 2014 was unexpected, as prior forecasts was to leave rates unchanged until 2013. With interest rates kept low, it advocates a cheap dollar policy, in which commodities will likely rise over time as the dollar weakens.
The US dollar sold off last week, dropping to near $79 in the continued wake of the Fed's statement on Wednesday.
With the Fed promising to leave interest rates near record lows for years, the dollar may have little strength in the coming months. Precious metal bulls may have enjoyed the move, as gold broke strongly above $1700 an ounce and continued to rally throughout the week, moving close to $1734.
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