How Dollar Price impact commodity prices.

mr.j

New Member
#1
Hi,
I'm new to this market.
I want to know how moment in Dollar price impact commodity(like Crude oil, Metals etc.) prices.

Regards
Jai.
 

rajeshn2007

Well-Known Member
#2
Hi,
I'm new to this market.
I want to know how moment in Dollar price impact commodity(like Crude oil, Metals etc.) prices.

Regards
Jai.
Basically, there is dollar-carry trade going on now. One other reason to sell the dollar is interest rates. Why not borrow in dollars where interest rates are low and invest elsewhere where yields are high? This is what is known as the carry trade.

In the past decade, the Japanese yen and the Swiss franc were favorites for the carry trade because of their low yields. But now, the U.S. dollar presents the same opportunity due to the likelihood that rates will stay low for a long time to come.

When they want to repay the dollar, they reverse the trades. dollar up/ gold/equity down.
 

AW10

Well-Known Member
#3
Hi,
I'm new to this market.
I want to know how moment in Dollar price impact commodity(like Crude oil, Metals etc.) prices.

Regards
Jai.
Commodity prices are denominated in $ terms hence they have inverse relationship with each other..
i.e when $ is going up, you need to pay less numbers of $ to buy 1 unit of commodity.
And when $ goes down, you need to pay more numbers of $ to buy same unit.

This is assuming other factors like demand supply, sentiments etc for commodity remains unchanged... otherwise, it is also possible that they both go in same direction.. ie. Natural gas prices going up in last 3-4 days.. when $ is also going up.. This is mainly due to shift in demand supply equation of natural gas. Winter is already around (it has already snowed in many places few days before the usual time), and last week, the Gas inventory has fallen in US. i.e. going forward, demand of GAS is going to go up.. and hence the relationship with $ is broken here..

Hope this answer your question..
 

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