
Cheaper euros mean stronger dollarsÂ
The greenback recently hit the 1.14 USD to 1 euro mark. The dollar hasn’t been this strong against the Eurozone currency in years. This should be expected since the ECB’s decision to print up an estimated 1.1 trillion euros will water down the value of the shared European currency. This boosts the US dollar’s strength. Since Japan is also devaluing its currency through its own quantitative easing, the US is surging in the US-JPY trade as well.
Where does this all leave us? As mentioned above, when the US dollar surges, commodities decline. Barring a quick global recovery, expect the downward trend in commodity prices to continue. Keep in mind that commodities don’t automatically follow oil’s lead. It’s only been recently that all nine major commodities are trading lower jointly. This is relatively rare. Usually, some commodities will be trending up while others are neutral or trending lower.
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