Commodities less correlated with the USD in the last year - AmpGFX

Commodity prices have broadly risen in the last month, possibly in response to a weaker USD, but overall there has been less correlation between the USD and commodities over the last year, according to Greg Gibbs, Analyst at Amplifying Global FX Capital. 

Key Quotes

“Commodities tended to firm despite a strong USD in late 2016; at this time global growth confidence and US growth confidence were rising together, helping commodity prices rise despite a rising USD.”

“The performance of commodity prices this year has been underwhelming; they have not been able to rally much despite a weaker USD.  In the case of energy prices, this reflects excess supply as US production has increased while OPEC and Russia attempt to work off excess inventory with production caps.”

“Commodity currencies and their commodity prices

The overall lacklustre commodity price performance this year begs the question are commodity currencies getting ahead of themselves.

Certainly, in the case of the CAD, it has rallied sharply in recent months despite a mixed oil price performance; responding instead to a Bank of Canada rate hike.  AUD is not out of line with its commodities. The relative strength in the NZD is supported by a strong recovery in dairy prices and firmer forestry and livestock prices.”