Another channel may be through the growth.  Falling commodity prices may reflect slower growth. The OECD recently revised down its forecasts for world growth.   Given the debt burden, Europe needs faster world growth.  If faster world growth is not materializing, a weaker euro secures for the EMU a greater share of what growth is taking place.

Commodities The Euro and Commodity Prices GRAB

Yet, the optics may be confusing. This lower chart shows the same two time series indexed to show the change over the past decade.  Two things seem evident.  First, the euro-dollar exchange rate is considerably less volatile than this basket of commodity prices.  Some time the two move in parallel direction, but not always.  In fact, as the chart shows, the euro has been generally appreciating since 2012, while the CRB has been trending lower.

Marc Chandler​
Associate Professor at
New York University Center for Global Affairs
Marc to Market​