US dollar → Commodities

Common explanation (Cause · opposite direction): Commodities are priced in dollars, so a strong dollar raises their cost for other countries and demand falls; from 2021, though, the two moved together for a time.

This issue: US dollar at 45 (neutral), Commodities at 73 (warm) — at least one is in the neutral range (40⁠–⁠60), so we make no call this issue.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

US dollar: 1.3% above its 10-year average, but by less than it usually is. Commodities: 47.4% above its 10-year average.

Tests

Does this link hold up?

Common explanationCommodities are priced in dollars, so a strong dollar raises their cost for other countries and demand falls; from 2021, though, the two moved together for a timeSource: Bank for International Settlements, “Commodity prices, the dollar and stagflation risk” (2023).
Tested against our dataAgreement between the positions of US dollar and Commodities (2-month lag), measured in the direction of the common explanation: +0.68 (an opposite-direction link: the raw correlation is −0.68, and a negative correlation fits, so the sign is flipped). Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 7 of 8; data start only in 2013. Supported by the data
Periods when it did not holdAcross 8 5-year periods, out of step in 2020⁠–⁠2025.

History

The two lines, overlaid

Data: Bank for International Settlements (BIS), nominal effective exchange rate of the US dollar (broad basket); World Bank Pink Sheet price indices (CC BY 4.0). Positions: our calculation.

US dollarCommodities

Time lag

At what lag do they match best?

Longer bar = moves more in the direction of the common explanation (the number is the agreement).

same month+0.61
3-month lag+0.72
6-month lag+0.79
9-month lag+0.83
12-month lag+0.80
18-month lag+0.69

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

Back to all links