Commodity rout shows no signs of slowing as loonie hits decade-low – by Carrie Tait (Globe and Mail -July 23, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY — The rout in commodities ranging from gold to oil is showing no sign of letup, taking the Canadian dollar down to its lowest level in more than a decade.

The widespread slide is tied to factors that include speculation interest rates are about to rise in the United States, and concerns that strong oil and iron ore companies will continue to increase production in hopes of squeezing their less-efficient counterparts out of the market.

This comes as the prospect for global economic growth remains weak and as the World Bank on Wednesday released ugly predictions for commodity prices.

Gold fell for its 10th consecutive day – its longest slip since 1996. The commodity hit a five-year low on Monday. The loonie was down 0.50 of a cent (U.S.) at 76.71 cents. That’s the lowest level since September, 2004, and oil prices retreated below $50. The S&P/TSX composite index dropped 69 points on Wednesday, bringing the loss to 2.3 per cent so far this week.

Patricia Mohr, a commodity markets specialist at the Bank of Nova Scotia, notes this is the fourth straight year in which global growth has hovered around 3 per cent.

“That doesn’t sound bad, but it is quite lacklustre,” she said. This comes, she notes, as large commodity producers try to put their competitors out of business at the expense of their own profit margins.

BHP Billiton, for example, on Wednesday said it would cut its production target for coal, petroleum and copper. It left its iron ore goals unchanged even though the commodity is trading down 27 per cent this year. The World Bank, in its commodity markets outlook, said iron ore will be worth 40 per less this year compared with last year.

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