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Commodity prices are priced in US$ globally and cycle pricing is more about the Trade Weighted US$ and global capital flows than anything else! Global capital flows are shifting back to Intl markets as the US$ foreign policy swings back towards support for Democratic institutions after a period of support withdrawal. The US$ is beginning to return to its long-term trend and commodity prices are rising as a result. Oil prices which normally rise during periods of political stress fell with North Korea's threats as there was a brief period of capital flows back into the US seeking safety with the 'saber rattling'. Now that fear of military action appears to be behind us, the US$ appears to be resuming its return to the long-term trend.
The fear inspired by the Russia's Ukraine invasion, the rise of ISIS and global terrorism resulted in a sharp rise in US$ in 2014-2016. US foreign policy has begun to reassert global Democratic protections. As investors perceive this to be effective, we can expect the Trade Weighted US$ Major Currency Index to fall another 25% from current levels as global capital flows normalize.
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