why are commodities affected by currency?

A cheaper dollar makes it more cost effective for other countries to buy our commodities (which are priced in USD i.e. $123.75 crude oil)

If oil is $100 a barrel and the exchange rate goes from 1.5Dollar=1Euro, to 1.6Dollar=1Euro, Europeans can pay over $100 for crude and it is still the same in euros, because they are recieving more dollars for thier same euro.
 
No more currency has been made, but money has been introduced via debt and sees oil as the most productive place to sit right now. When the debt goes goodbye, so does the money that was used to make oil and whatever other assets go higher.

:D
 
Quote from Uncle_Ho:

A cheaper dollar makes it more cost effective for other countries to buy our commodities (which are priced in USD i.e. $123.75 crude oil)

If oil is $100 a barrel and the exchange rate goes from 1.5Dollar=1Euro, to 1.6Dollar=1Euro, Europeans can pay over $100 for crude and it is still the same in euros, because they are recieving more dollars for thier same euro.
More...


Thanks for your response. That makes sense. So im guessing the big debate is whether the price surge is due to the dollar or actual demand in commodities.
 
Quote from jonbig04:

Thanks for your response. That makes sense. So im guessing the big debate is whether the price surge is due to the dollar or actual demand in commodities.
More...
most commodities are priced in dollars but not valued in dollars.
 
It's about half and half in my opinion. The recent crude rally, I think has more to do with analyst expectations and many shorts being squeezed.
 
You must log in or register to reply here.
Back
Top