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A BIS paper by Hofmann, Igan and Rees, dated April 13, 2023, finds that commodity prices and the US dollar have recently moved together, breaking their usual inverse pattern. The authors attribute the shift to a mix of temporary shocks and structural factors, including the US becoming a net energy exporter.
They warn that the change adds stagflation pressure for commodity importers.
If commodity prices and the dollar keep rising together, importing countries face higher costs for feed inputs and weaker currencies, which can squeeze buyers' margins.
mondovisione.comBoris Hofmann, Deniz Igan, Daniel ReesApr 13, 2023After 359 past neutral macro events, US Dollar (Broad) moved a median -0.0% over 5 sessions (49% higher; middle half -0.4% to +0.4%), and -0.1% over 20.
After 102 past neutral macro events, Crude Oil (WTI) moved a median -0.1% over 5 sessions (49% higher; middle half -3.3% to +2.5%), and +1.8% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
