Since the start of July, the US Dollar index has weakened by almost 2%. This decline has primarily come in the 16 days since the US Bureau of Labor Statistics published the country’s latest annual inflation figure, which stood at 3% for June. With inflation now approaching target levels, markets are expecting the Federal Reserve to conclude its rate-hiking cycle in the near future, with the possibility of a final 25 basis point raise in July. As the USD has weakened in recent weeks, ChAI’s models have interpreted the relative strengthening of several currencies as key drivers for commodity prices. In this week’s blog, we will look at three example commodities and a correlated currency which has changed in value recently, and examine how the slide in USD strength creates opportunity elsewhere.
Commodities and Currencies Before diving into the examples, it is worth explaining why the weakening US Dollar is so important in…
