Thursday, May 28, 2015

Iron Ore could settle at over $60 / tonne | Blizzard of comment might mean a Greek breakthrough

Last April, when the price of Iron Ore was at its lowest, we asked “Is Iron Ore the deal of a lifetime opportunity?” The price was then below $40 per tonne. We wondered if it might not be to the advantage of someone with sufficient financial muscle to start taking up positions in Iron Ore futures, with a view to capitalising on a rise in the price of the commodity.

That rise has now taken place, and in double quick time. The reasons given are a reduction in Chinese stockpiles, further economic stimulus by the Chinese government and the exit of a number of second-tier producers from the industry.

Price now stands at close to $65. The chart of Iron Ore prices, above, can be subjected to Technical Analysis, just as can the charts of your favourite equity or currency pair. It shows a very clear indication that something north of $60, even approaching $65, could well become the benchmark for Iron Ore for the foreseeable future.

Blizzard of comment might mean a Greek breakthrough

Yesterday saw comments from Greek government officials that tried to give the impression that a deal with the EU and the IMF was almost in the bag. The Greek Prime Minister, Alexis Tsipras, made a speech in which he said that an agreement would be finalised by this coming Sunday. On the other side the ECB piled on the pressure by warning all concerned that further prolongation of the Greek negotiations could make it difficult for some other EU member states, which are not yet fully out of the woods, to borrow in the bond markets. Ewald Nowotny, Austrian central bank governor and a member of the ECB governing council, said that Greece cannot receive interim funding under current rules, which is widely interpreted as meaning that there will be no “kicking the can down the road” this time round.

And Christine Lagarde, head of the IMF, was quoted by Frankfurter Allgemeine Zeitung yesterday as saying that, while Greek exit from the Eurozone was “a potential”, it would not signify an end to the Euro.

We wonder does all this activity and commentary a signal that, at long last, we have truly reached a make or break situation in relation to the Greek question. Or have we heard that before?

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