uploads///Crude Oil versus Dollar Index

How the Fed’s Interest Rate Decision Impacted Crude Oil

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Jun. 20 2016, Published 9:35 a.m. ET

The Fed kept interest rates unchanged

On June 15, 2016 the FOMC (Federal Open Market Committee) announced its decision to keep interest rates unchanged.

The US Dollar Index (UUP) fell by 0.33% following the Fed’s announcement. Last week, the US Dollar Index fell by 0.38% between June 10 and June 17. The fall in the index is an important catalyst for crude oil prices. However, in the current scenario, crude oil’s movement is more determined by mainstream news than by the dollar index.

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US Dollar Index and crude oil

A rise or fall in the US Dollar Index could have a negative or a positive respective impact on crude oil prices. Read What’s the Correlation between Crude Oil and the Dollar Index? to learn more. Our analysis is important for crude oil–weighted stocks such as Abraxas Petroleum (AXAS), Triangle Petroleum (TPLM), and Denbury Resources (DNR).

ETFs such as the Direxion Daily Energy Bear 3X ETF (ERY), the First Trust Energy AlphaDEX ETF (FXN), the United States Brent Oil ETF (BNO), and the United States Oil ETF (USO) are also impacted by economic data and the correlation of crude oil prices with the US Dollar Index.

In the next part of this series, we’ll look at the weather forecast and how it could impact natural gas prices.

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