, Columnist
The Dollar and Commodities Break a Long-Standing Pattern
They once moved in opposite directions. Here's why they're now in tandem.
How much wheat is that?
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As a general rule, there’s an inverse correlation between the value of the U.S. dollar and commodity prices. This pattern holds true more often than not, but we are in a period when this trend has been reversed.
Consider a long-term chart of the S&P GSCI Commodity index, which represents a broad mix of commodity futures, against the U.S. Dollar Index, which tracks the greenback against a basket of the major currency peers. It’s evident that over time, when the dollar moves higher, commodities tend to move lower and vice versa.