Analysts at JP Morgan Historically explained that there has been an inverse relationship between commodity prices and the U.S. dollar, as commodities are priced in dollars, but traded on a global basis. As such, when the dollar declines, non-U.S. producers of commodities demand higher dollar-denominated prices, and foreign consumers are often willing to pay these higher prices because it does not constitute a change in purchasing power. This inverse relationship holds true for commodities broadly, but variations do exist within the asset class and tend to be driven by the underlying supply and demand dynamics for each individual commodity. For example, the U.S. is one of the largest producers of livestock in the world, whereas China is the largest consumer of industrial metals. Â As a result, metals have displayed a high degree of sensitivity to declines in the dollar, whereas livestock tends to fall when the dollar declines. Looking ahead, a worsening fiscal deficit and structural trade deficit in the U.S., coupled with slower growth in 2019 due to fading fiscal stimulus, should push the dollar lower over the medium to long term. Meanwhile, growth outside of the U.S. and commodity demand are both poised to remain healthy. This backdrop suggests that there may be an opportunity in commodities going forward, particularly those parts of the market that have shown an elevated sensitivity to changes in the U.S. dollar FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Brexit: three down, more to come? – TDS FX Street 4 years Analysts at JP Morgan Historically explained that there has been an inverse relationship between commodity prices and the U.S. dollar, as commodities are priced in dollars, but traded on a global basis. As such, when the dollar declines, non-U.S. producers of commodities demand higher dollar-denominated prices, and foreign consumers are often willing to pay these higher prices because it does not constitute a change in purchasing power. This inverse relationship holds true for commodities broadly, but variations do exist within the asset class and tend to be driven by the underlying supply and demand dynamics for each individual commodity. For… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.