Wednesday, November 4, 2009

Goldman Should Know

Nov. 4 (Bloomberg) -- Crude oil, which has risen 80 percent this year, is causing the U.S. dollar to weaken, driving metals and other commodities higher, according to Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc.

While oil has risen, the U.S. currency has weakened, leading to speculation that the dollar’s depreciation is driving investors to buy oil as an inflation hedge, thereby pushing up the price of crude.

“I would argue the other way,” Currie said in an interview yesterday in London. “I would argue that higher oil prices drive the dollar down and then the weaker dollar drives the metals and soft commodities up.”

I've been noticing the phenomenon myself as I'm sure many of you have .
First the Rbob (or HO), then WTI , then the Euro. Then everything else.

Of course in a consumer driven economy, that runs into trouble at some point.

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