The Fed's monetary policy will have a great impact on the global economy, especially for the small partners who invest in the commodity market, they should pay more attention to the Fed's interest rate cuts and interest rate hikes. Today, let's talk about the impact of the US interest rate cut on commodities.

The impact of interest rate cuts in the United States on commodities

The Fed's policies will have an impact on the global economy, which in turn will affect commodity prices. But the reality is that the impact on commodities is mostly transmitted through the US dollar. On the one hand, the prices of major commodities in the world are denominated in US dollars. On the other hand, the strength of the US dollar can also reflect the state of the global economy.

Judging from the historical trend of commodity prices, when the Federal Reserve cuts interest rates, commodity prices, especially the prices of basic industrial products, are likely to rise first. For example, copper is an important industrial metal in the world, and the impact of interest rate cuts on global copper prices has shown a significant upward trend. The performance of crude oil futures price is slightly different from that of copper price. The rise of oil price is later than that of copper price, and the increase is also smaller than that of copper price. As an important safe-haven asset, gold is an alternative asset to fight inflation, and interest rate cuts will inevitably affect the price of gold. In terms of agricultural products, the prices of soybean oil and rapeseed oil may rise in stages.

The Impact of American Interest Rate Reduction on China Stock Market;

After the interest rate cut in the United States, it means that the currency spread between the RMB and the US dollar has narrowed, which will cause overseas funds to continuously enter the China stock market for investment and seek profits, and overseas funds will be continuously injected into the China stock market. It will continuously enhance the impetus to the China stock market, stimulate the funds in the stock market, and make the market in an active stage. Usually, the stock market is likely to rise during this period.

Generally speaking, the interest rate cut in the United States is conducted through the US dollar, which has a long-term positive effect on commodities and will promote the price increase of commodities. However, the sub-categories of commodities will be differentiated and need to be analyzed in combination with the relationship between supply and demand.