Higher commodity prices on stronger euro and weaker dollar

The euro strengthened against the dollar when Jean-Claude Trichet, the president of the European Central Bank indicated a rise in the interest rate later this year. With weaker dollar, commodity prices began to rise, with the price of oil passing $124.

Weaker dollar prompted many speculators to look at the drop in commodity prices the last few days, as a buying opportunity. Thursday saw most commodity sectors gain in prices, except the meats. Weak dollar has been seen as one of the main support to high commodity prices, so higher commodity prices following a stronger euro against the dollar should not have come as a surprise.

The dollar has been falling since early 2002 and that has been supporting commodity prices, first with higher prices in metals and then since 2006, the price of agricultural commodities.