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“The latest rally in commodity prices is reminiscent of 2009-2010 in that it has been fuelled by strong Chinese demand. We expect that this is likely to run out of steam this year, as stimulus is withdrawn, and that prices will fall back,” Capital Economics’ chief commodities economist Caroline Bain wrote.
Each individual commodity requires should be evaluated on its own, according to Scotiabank Economics senior economist Marc Desormeaux.
“In terms of broad increases in commodity pricing, that is something that we’ve built into our forecast,” Desormeaux said in an interview.
Desormeaux published his most recent Scotiabank Commodity Price Index on Jan. 28 and expects Brent oil benchmark prices to rise from an average price of US$39 per barrel in 2020 to US$51 per barrel this year and US$57 per barrel next year.
He also forecast higher average prices for natural gas, copper, nickel, zinc and aluminum in each of the next two years, though iron ore and gold prices are expected to level off in 2021.
The Canadian dollar has also edged higher against U.S. dollar on Monday, on the back of surging oil prices and as data showed speculators raising bullish bets on the currency.
The loonie was trading 0.1 per cent higher Monday at 1.2738 to the greenback, or 78.49 U.S. cents, having touched its strongest level since Jan. 27 at 1.2731, Reuters reported.
As of Feb. 2, speculators had raised net long positions in the Canadian dollar to the most since last February, data from the U.S. Commodity Futures Trading Commission showed on Friday.
“Rising oil and natural gas prices, along with other commodities appear to be giving the loonie a tailwind at the moment,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.
— With files from Thomson Reuters
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