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FXstreet.com (London) - Commodity prices have broadly been under pressure this week on a resurgent dollar and the effects of surprisingly hawkish Federal Reserve minutes from its October meeting released earlier this week.

WTI had seen some declines on the prospect of the Fed being open to reducing the size of its monthly asset purchases and so tapering its support for the US economy, the world’s largest consumer of oil. According to the International Energy Agency, the US will account for 21 percent of demand this year.

However, WTI contracts have been resurgent thanks to strong US jobless claims suggesting that the US is showing some solidifying of economic recovery. WTI for January delivery is at USD95.09/barrel, down 0.37 percent but still heading for its first weekly gain after six straight weeks of declines – the longest losing streak in 15 years.

Although the Fed minutes were more hawkish than expected, a December taper still looks like a long bet. It is more likely that the Fed will wait until at least its March meeting to allow more data and to allow the economy to weather any damaged should congress have another stand off when the debt ceiling extension expires on 7 February. Even so a March taper would be bearing for global commodity prices.

The Canadian dollar may prove to be the most sensitive to any commodity market sluggishness. With its current low growth and inflation issues, and slump in demand could put heavy pressure on the Loonie.
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