US Dollar Weakens While Commodities Rise in July

The month of July was dominated by US dollar weakness, geopolitical tensions, the European revival and a strong commodity price rebound

Richard Whitehall 4 August, 2017 | 10:25AM

The month of July was dominated by five key themes; US dollar weakness, geopolitical tensions, the European revival, a strong commodity price rebound and further asset price strength.

The US dollar weakness had a large influence on returns as inflation came in lower than expected and consumer sentiment hit a nine-month low. The greenback fell by 1.5% against sterling, 3% against the euro and more than 4% against many of the ‘risk-on’ currencies including the Australian dollar and Brazilian real. In fact, the US dollar now carries a five-month losing streak against the euro.

Part of the weakness was also likely to be related to tensions between Russia and the US, with new sanctions sparking media headlines of a “new Cold War”. From a financial market perspective, the clear loser was Russia, with both the Russian ruble and Russian equities falling despite an 8% rebound in oil prices.

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About Author

Richard Whitehall

Richard Whitehall  is a portfolio manager for Morningstar Investment Management

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