Two odd things appear to be happening in tandem at the moment: the $US is rising, and the price of oil is falling.
I say odd, but there are plenty of available explanations for these parallel events. Forbes, for example, says there is a growing feeling among US monetarists that a cheapened Dollar increases the likelihood of its decline in power as both a reserve and oil-based transaction (‘petrodollar’) currency. MBN suggests that investors’ expectations that the Fed will raise interest rates are driving the desire to be early on the bandwagon. They also add that ‘wobbly growth data coming out of China, Japanese consumer demand that has dried up since its sales tax hike in April, and a Eurozone GDP standstill’ are other key factors in its rising value. The FT (as the Pinkun would) says it’s all down to US growth, and the coming recovery there. And one or two pundits think the Hong Kong democracy riots have caused a move out of the Yuan. Continue reading