US dollar  

The US Dollar Index fell 0.5% to 92.12 on December 29, 2017—the fourth consecutive day of losses. It’s near a three-month low. The depreciating dollar supported crude oil (USL) (SCO) prices last week. Higher oil prices favor funds like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

The US Dollar Index fell ~9.8% in 2017. It was the worst annual fall since 2003. It also supported oil (DBO) prices last year. US crude oil prices rose ~12.4% in 2017. The dollar fell due to the improving economy outside the US.

Will the US Dollar Help Crude Oil Bulls or Bears in 2018?

US dollar’s lows and highs  

The US dollar (UUP) tested 91.3 on September 8, 2017—the lowest level in nearly three years. It impacts the PowerShares DB US Dollar Bullish ETF (UUP), which tracks the US dollar’s performance. In contrast, the US dollar tested 103.8 on January 3, 2017. It was the highest level in nearly 15 years.

US dollar and crude oil 

Crude oil is a dollar-denominated commodity. A depreciating dollar makes crude oil economical for crude oil importers. So, crude oil (USO) prices rise. Higher oil (DWT) prices favor energy companies (FXN) (IYE) like Laredo Petroleum (LPI), Baytex Energy (BTE), and Goodrich Petroleum (GDP).

On the other hand, an appreciating dollar makes crude oil expensive for oil importers. So, crude oil prices (USL) (DWT) fall.


The Fed might increase the US interest rate three times in 2018, which could drive the US dollar higher. However, the fall in stimulus from other major central banks in 2018 could see the US dollar lag its peers. The European Central Bank could raise interest rates by the end of 2018. The euro rose 14% in 2017—the best annual increase since 2003. It was also the best performance against the US dollar in 14 years. Any change in the US dollar could be reflected in oil (UWT) prices.

Next, we’ll discuss how Cushing inventories impact oil prices.

Latest articles

President Trump eased the Huawei ban on June 28. Since then, investors have been closely monitoring how US officials implement the policy change.

Norfolk Southern will report its second-quarter earnings results on Wednesday. The company is expected to report an adjusted EPS of $2.79.

Dish Network’s (DISH) wireless business is currently in the making, as cord cutting has hit US satellite pay-TV providers harder than their cable counterparts.

Halliburton (HAL) reported its second-quarter earnings on Monday before the markets opened. The company's earnings rose sequentially.

David Rosenberg said that earnings are “rolling over” and economic data indicates that the economy is very close to recession.

22 Jul

Starbucks to Report Double-Digit EPS Growth in Q3

WRITTEN BY Rajiv Nanjapla

Starbucks (SBUX) is scheduled to report its fiscal 2019 third-quarter earnings results after the market closes on July 25.