A stronger US dollar is an ongoing headwind for commodity prices
A stronger US dollar is an ongoing headwind for commodity prices. The US dollar is still toward the low end of its historical range (the chart dates from 1980) but has been on a rising trend since the cyclical peak in commodity prices early in 2011. The precise level of metal prices on international exchanges will be a function of numerous macro and industry factors but the US dollar exchange rate can play an important role in reinforcing the effect of market balances if the current trajectory becomes more pronounced. The downward pressure on prices from a stronger currency is likely to become more pronounced as expectations of higher US interest rates gather momentum against a backdrop of intensifying pressure for looser monetary policy settings in Europe.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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