Eurodollar University Oil Shock → Dollar Shock → Deflation: The Chain Reaction Just Started
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Mar 22, 2026 Consecutive multi-day liquidations hit gold, silver, copper and aluminum, with unusual intraday patterns pointing to deeper forces. A sudden oil disruption is shown to spike global dollar funding needs and strain eurodollar plumbing. Discussion ties commodity sell-offs to private credit stress and to tightening in FX swap markets, suggesting a chain reaction that could amplify deflationary pressures.
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Commodities Were Liquidated Not Sold
- Commodities were subject to forced liquidations, signaling acute dollar funding stress rather than ordinary selling.
- Gold fell from ~$5,300 to ~$4,550 across days with Asian-session liquidation, while aluminum had its worst LME day since 2018.
Dollar Strength Reflects Funding Stress
- The dollar exchange rate measures eurodollar flow and funding pressure, not domestic monetary policy or 'debasement.'
- Rising dollar value signals restricted dollar flows and greater difficulty sourcing dollars globally.
Eurodollar Is The Global Plumbing
- The eurodollar functions as the global medium that intermediates trade and finance, enabling flows like the Japanese carry trade.
- Firms commonly swap local currency for dollars to invest abroad, showing the dollar's central plumbing role.