The recent oil price crash coincided with a rally in the US dollar.
However, the dollar has varying relationships with varying commodities.
A blog post by Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices, analyses how different commodities are affected by a strong dollar. Gunzberg starts by noting:
“A strong US dollar is generally bad news for commodities since historically as the U.S dollar strengthens, goods priced in dollars become more expensive for other currencies.”
Gunzberg’s post includes a chart showing the correlations between different commodity prices and the dollar over ten years. The year in which each individual commodity index was introduced is shown in parentheses:
The correlation between two sets of values is a number between -1 and 1 that describes how strongly related the sets are to each other. Negative correlations mean that the values move in opposite directions: if one value goes up, the other goes down. The closer to 1 or -1 the correlation is, the stronger the relationship between the quantities; the closer to 0, the weaker the relationship.
The five commodities with the strongest negative relationship to the dollar are all oil-based, with the two crude oil benchmarks coming in at the top. A rise in the dollar generally tends to correspond to a fall in these commodities. Meanwhile, livestock and sugar have much weaker relationships with the dollar.