Commodity prices and the US dollar have moved in tandem recently, in contrast to their usual statistical pattern of moving in opposite directions.
The causes of the change in the relationship are partly temporary, such as the unusual combination of recent shocks, and partly structural, such as the United States' emergence as a net energy exporter.
The change in the nexus compounds the stagflationary effects of higher commodity prices for commodity importers, while its implications for commodity exporters are more ambiguous.
A lasting change in the nexus could create more difficult challenges for macro-financial stability frameworks, particularly in commodity-importing economies.
