24 May

How the Dollar Is Affecting Oil

WRITTEN BY Rabindra Samanta

US dollar and crude oil

US crude oil (DBO) (USL) (OIIL) July futures rose 5% between May 16 and May 23, 2017. The US Dollar Index (UUP) (USDU) (UDN) fell 0.8% during this period.

How the Dollar Is Affecting Oil

In the last five trading sessions, US crude oil and the Dollar Index moved inversely. The correlation between them stood at -79.4% as the two moved in opposite directions three out of five times in the trailing week.

A weaker dollar could boost crude oil prices because a fall in the dollar decreases the price of oil for oil-importing countries. The opposite can also hold true.

Interest rate and crude oil

The US dollar could be impacted by the Fed’s interest rate decisions. Though the Fed maintained the benchmark rate at its last monetary policy review on May 3, 2017, the market expects rates to move up two more times by the end of 2017. So, because of their effect on the dollar, interest rates can affect oil prices.

The above analysis could be important for ETFs like the Direxion Daily Energy Bear 3X ETF (ERY), the Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X ETF (DRIP), the United States Brent Oil ETF (BNO), the First Trust Energy AlphaDEX ETF (FXN), and the United States Oil ETF (USO).

What does the long-term correlation say?

Between September 2007 and June 2013, the rolling one-month correlation between crude oil and the US dollar was negative in most instances.

However, since June 2013 to date, the correlation ranged between -64.0% and 43.0%. The correlation was positive in many instances. So, fundamental factors likely dominated oil price movements. Right now, Trump’s economic, energy, and climate policies along with OPEC’s production cut decision could be oil’s crucial drivers.

Latest articles

Today, Canopy Growth announced that it acquired the Saskatchewan-based KeyLeaf Life Sciences along with entities relating to the company and its intellectual property. Here's what you need to know about the completed deal.

Yesterday, Tyson Foods (TSN) and fellow meat producers Pilgrim’s Pride (PPC) and Sanderson Farms (SAFM) took a hit to their stocks after news came out about an investigation over price-fixing allegations.

On June 24, RH (RH) was trading at $115.01, implying a rise of 21.2% since its announcement of its first-quarter earnings results on June 12. Despite the surge in its stock price, the company is still trading at a discount of 29.1% to its 52-week high.

26 Jun

Roku Stock Fell Close to 7.0% Yesterday

WRITTEN BY Aditya Raghunath

Roku stock fell 6.8% yesterday to close trading at $93.25 per share. Roku stock has lost over 9.0% in market value in the last two trading days. Prior to this pullback, Roku stock was up a whopping 235.0% year-to-date.

26 Jun

Beyond Meat Stock Up Today on New Product Launch

WRITTEN BY Rajiv Nanjapla

Today, Beyond Meat (BYND) announced that its new product, Beyond Beef, will hit markets across the US later this week.

FedEx (FDX) ended fiscal 2019 on a dismal note and reported a significant YoY decline in fourth-quarter earnings. The delivery giant posted adjusted EPS of $5.01, which was 15.2% lower than the year-ago quarter’s earnings of $5.91. The company cited sluggish revenue growth and increased expenses as the main reason behind the dismal bottom-line performance.