Title: The Inverse Relationship Between the Dollar and Commodities
Headings: How the Dollar Impacts Commodity Prices
Assets & Markets Commodities
How the Dollar Impacts Commodity Prices
The General Rules Might Be Changing
Key Takeaways
Why the Movement?
Commodities Are Global Assets
The Dollar Is the Benchmark Because It's Stable
The Effect on Commodities
Is Change in the Air?
Monitoring the Dollar

Content: The largest producers of cocoa beans are in Africa in the Ivory Coast and Ghana regions. As you can see, commodity production depends on climate and geology in specific locations. But the people and companies that want these important raw materials are located all over the globe. The vast majority of these materials use the dollar as a pricing mechanism for global trade because of the United States' strong, stable economy. When the dollar strengthens, it means that commodities become more expensive in other, nondollar currencies. This tends to have a negative influence on demand. And as you would expect, when the dollar weakens, commodity prices in other currencies drop lower, which increases demand. The Effect on Commodities
Each commodity has idiosyncratic characteristics, but the value of the dollar has historically had a direct influence on the prices of all commodities. When the dollar began to strengthen in May 2014, the U.S. dollar index traded to 78.93 on the active month futures contract. In early March 2016, that dollar index was trading around the 97 level;