It's a given in the market that there's an inverse relationship between dollar strength and the price of commodities, but Citi Research argues that correlation is now gone.
"Commodity prices have traded in a strong inverse relationship with the U.S. dollar over the past decade or so, but this relationship broke down in late 2016 and the breakdown looks here to stay"
Case in point—commodities generated strong returns in the fourth quarter of 2016 with the Goldman Sachs Commodity Index moving 9 percent higher despite a stronger greenback which gained about 7 percent against major currencies.
Key commodities traded globally such as crude oil, gold, copper and softs like wheat are typically priced in dollars, with liquidity often favor the major exchanges in New York, London and Chicago as centers of trade.
Source CNBC
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