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: Why the Movement? The primary reason the value of the dollar influences commodities prices is that the dollar is the benchmark pricing mechanism for most commodities. U.S. currency is the reserve currency of the world. The dollar tends to be the most stable foreign exchange instrument, so most other nations hold dollars as reserve assets. When it comes to international trade for raw materials, the dollar is the exchange mechanism in many if not most cases. When the value of the dollar drops, it costs more dollars to buy commodities. At the same time, it costs a lesser amount of other currencies when the dollar is moving lower. Commodities Are Global Assets
Another reason for the influence of the dollar is that commodities are global assets. They trade all over the world. Foreign buyers purchase U.S. commodities such as corn, soybeans, wheat, and oil with dollars.