Currency valuation is a two-way street. That is, price can be dictated by forces affecting either side of the currency pair. Strength of the US Dollar versus the Euro could be as much about Euro-zone weakness as it is about US economic strength. The former appears to be the case presently, as concerns about financial conditions in Greece, Ireland and elsewhere are weighing heavily on the Euro. Indeed, the Euro has fairly crashed in recent days, with the market dropping from over 1.45 versus the USD to near 1.40. That is huge currency movement in just five or six trading sessions.
Strength in the USD has weighed on commodity pricing this week, as have actions taken by China to stem inflationary pressures. The comparatively small, comparatively insular US dairy markets can sometimes stand to the side, somewhat insulated from forces that affect, say, crude oil. Yet it is perhaps not entirely coincidental to see some downward pressure in the US dairy space this week and a significant downtick in prices for European butter.
