In a further blow to the inflation-growing aspirations of central banks around the globe, the price of commodities continues to fall precipitately. Oil, in particular, had another very bad day yesterday on the back of news out of the Middle East that OPEC members had failed to agree on production cuts that might tend to place a floor under the price.
Saudi Arabia seems to be determined in its drive to place as much pressure as possible on shale producers in the U.S, by using its economic muscle to attempt to make it uneconomic for what they see as relative newcomers to the market place. This is causing so much aggravation among its members that we are now seeing headlines to the effect that the OPEC cartel has effectively ceased to exist as a potent force.
Meantime that old stalwart of the Australian economy, Iron Ore, is following oil into the lower reaches of the price charts. Energy is such a large part of the production cost of the raw material for steel that this is almost inevitable. It does, however, place higher cost miners, those outside of the group that is made up of the three majors: BHP Billiton and Rio Tinto of Australia, and Vale of Brazil, under the kind of pressure that threatens their very existence.
Eurozone GDP today
All concerned parties will be keeping a close eye on Eurozone Gross Domestic Product figures, which come out this morning at 09:00 GMT. Last month, figures for the third quarter showed growth across all the countries that use the Euro to be only 0.3%, down from 0.4% on the previous period and also lower than expected.
Any news on this front later this morning that does not show new growth will only serve to place further downward pressure on the Single Currency.