Strength in the US Dollar is a big reason why commodities are having another tough year overall

Strength in the US Dollar is a big reason why commodities are having another tough year overall. The USD Index is up 5.2% so far this year, while DJP, a broad measure of commodities, is down about 3% over the same period. Certainly, supply and demand dynamics are impacting some commodities, such as grains, which are down this year on robust crop numbers in the US. However, gold, other precious metals, and to some extent oil, are all feeling pressure from the higher greenback. The one big exception is coffee, which is up 67% year to date on supply constraints in Brazil and Central America. Livestock has also remained strong throughout the year. Nevertheless, given the recent surge in the USD Index, it's no wonder most commodities are in the red again this year.