16 Jan 2015
USD and oil domination - BNP
FXStreet (Guatemala) - Alexandra Estiot, analyst at BNP Paribas, explained that since last summer, the drop-off in oil prices and the dollar’s appreciation have dominated financial market trends.
Key Quotes:
"In early August, West Texas Intermediate, the benchmark price for US crude oil, fell sharply below USD 100 a barrel, after fluctuating slightly above that level in early 2014, before (briefly) dropping below USD 45 a barrel this week, the lowest level since April 2009. Over the same period, the external value of the dollar, measured by its effective exchange rate, increased strongly, appreciating 9% using a narrow index or 13% using a broad index."
"These two factors operate simultaneously on price trends."
"Since June, the import price index has declined by 7.3%, with prices for petroleum and petroleum products alone down 35.6% and other import goods down 0.5%."
"On a year-on-year basis, imported inflation swung back into negative territory in August and reached -5.5% in December, a trend that is bound to be mirrored in the price index excluding petroleum in the near future. They also have a big impact on domestic price indices, notably on the producer price index, which also slipped back into negative territory on a year-on-year basis: the finished products PPI was down 0.7%."
Key Quotes:
"In early August, West Texas Intermediate, the benchmark price for US crude oil, fell sharply below USD 100 a barrel, after fluctuating slightly above that level in early 2014, before (briefly) dropping below USD 45 a barrel this week, the lowest level since April 2009. Over the same period, the external value of the dollar, measured by its effective exchange rate, increased strongly, appreciating 9% using a narrow index or 13% using a broad index."
"These two factors operate simultaneously on price trends."
"Since June, the import price index has declined by 7.3%, with prices for petroleum and petroleum products alone down 35.6% and other import goods down 0.5%."
"On a year-on-year basis, imported inflation swung back into negative territory in August and reached -5.5% in December, a trend that is bound to be mirrored in the price index excluding petroleum in the near future. They also have a big impact on domestic price indices, notably on the producer price index, which also slipped back into negative territory on a year-on-year basis: the finished products PPI was down 0.7%."