The recent commodity rally comes down to two factors: a weaker dollar and hopes of an economic rebound, Morgan Stanley says. “If one sees green shoots, one should be long commodities. If one sees future inflationary pressures resulting from excessive fiscal and monetary activism, one should be long commodities. If one sees weakening confidence in the US dollar and the difficulty of US policymakers to sufficiently stimulate the economy without further risk to the dollar, one should be long commodities,” the bank’s commodity researchers say. No surprise that they conclude a slowing in the greenback’s decline is the “biggest near-term risk to commodity prices.”

The Bank of Canada says that in recent weeks, financial conditions and commodity prices have improved significantly, and consumer and business confidence have recovered modestly. But it adds that “If the unprecedentedly rapid rise in the Canadian dollar (which reflects a combination of higher commodity prices and generalized weakness in the U.S. currency) proves persistent, it could fully offset these positive factors.”

Vietnam shares tipped to continue extending gains on
local buying amid rising inflows as more players move away from dollar savingsto enter stock market after major banks cap interest rates for dollar funds at 1.5% from June. “After strong gains in recent days, it’s reasonable to have profit-taking in select stocks, but because putting money in shares is expected to generate higher returns (than savings in banks), I think buying appetite will continue and the key index is forecast to hit 460 soon,” says trader; tips index in 450-455 range today after ending +3.3% at 440.56 yesterday.