Appreciation of the U.S. dollar moderates recent decline in crude oil prices for some oil-producing nations (2/19/2015)

Starting in the second half of 2014, crude oil and currency market movements reflected diverging monetary policy, economic growth, and inflation expectations for the United States compared to the rest of the world. Gross domestic product (GDP) forecasts for countries outside of the Organization for Economic Cooperation and Development (OECD), which are responsible for most of the projected growth in liquid fuels consumption, were repeatedly revised lower last year and contributed to the downward movement in crude oil prices. The United States, in contrast, showed robust economic and employment growth in 2014, which is forecast to continue through 2015. Given this scenario, the Federal Reserve could let interest rates rise as early as this year for the first time since the recession in 2008-09. In contrast, monetary authorities facing weaker home economies have recently acted to lower interest rates in an effort to spur economic growth. The U.S. dollar (USD) has been appreciating relative to most other currencies, reflecting the perceived strength of the U.S. economy in relation to other OECD and non-OECD countries. ... More »