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Commodities' Future Looks Bleak - Look For Short Opportunities |
Rio Tinto (RTP) announced today that they are laying off 14,000 workers. Combined with a proposed financing restructure the company hopes to weather the storm in commodity prices over the long term. The CEO called the current market environment of commodity price collapses "unprecedented." Personally, I would have to agree. 
Commodity prices have not gotten as much attention lately as traders have been preoccupied with the disaster in the credit market and the see-saw action of the risk environment. However, if a long term bear market in commodity prices is expected, then forex traders know where to look for opportunities.
Rio Tinto mines several metal ores and other industrial grade mineral products. They have a large presence in Australia and North America. I suspect that this trend of struggling commodity companies will hurt those currencies that are particularly sensitive to basic materials price changes.
As I look for opportunities to leverage this information I automatically think about the Canadian dollar, including the USD/CAD and EUR/CAD exchange rate or forex pairs. In both cases, there are consolidation patterns emerging with upside potential.
In the video I will go into more detail about opportunities and cover a few pros and cons between the two pairs. If you want more detail about the potential relationships between stocks and the forex, click here.
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