Commodities Market Resilience Threatens The Dollar

Commodity markets are signaling that investors may be overly pessimistic about global trade or the prospects for trade negotiations between the United States and other countries. The recent conclusion of the NAFTA renegotiation reinforced the claim that the global trade dispute will not be long. Industrial metals and agriculture, which had been hit early this year by the US government ‘s protectionism, are now rebounding. High-beta and emerging-market currencies have also bottomed out and are moving away from the broader dollar strength.

  • Iron ore prices are often seen as benchmarks for Chinese industrial activity. Iron ore prices are on the rise despite the recent decline in the Chinese stock market and yuan appreciation.
  • Copper prices have recently moved out of the trough, showing a good trend.
  • Gold prices are also rising, breaking the downward trend and leading to the weakness of the dollar.
  • The rise in commodity prices has also become a threat to the dollar long position.
  • The MSCI Emerging Markets Index has also bottomed out and the Australian and Canadian dollars, which serve as coal mines, are gaining support.
  • Soybean futures prices, which had been heavily influenced by the US trade dispute this year, are now sending positive signals.