Commodities Falter in Currencies as History Shows Dollar Wins
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Speculators betting the commodities rally will continue into a third year are being confronted by currency investors wagering the dollar will strengthen in 2011. If history is any guide, the foreign-exchange market will win.
Traders have almost tripled their net-long positions in 20 raw-material futures the past five months to the highest level in at least four years, driving a 26 percent gain in the Thomson Reuters/Jefferies CRB Index, government data show. Contracts on the dollar strengthening against the euro have climbed to a three-month high. The U.S. currency moved in the opposite direction of commodity prices 18 of the past 22 quarters, according to data compiled by Bloomberg.