Dollar exchange rate with major currencies and crude oil prices today, 20 July

The US economy is heading toward rocky waters with high inflation, high consumer spending, high energy prices and high borrowing rates, affected by increasing interest rates.

All this is down to high inflation. In June, inflation increased 1.3 percent from May, leading to a year over year rise in prices of of 9.1 percent. This surge in prices was, at first, motivated by supply chain shortages, caused by the covid-19 pandemic.

This year, prices have risen as a response to the Russian invasion of Ukraine, causing fuel shortages across Europe as sanctions limit the EU’s willingness to purchase Russian energy commodities. Sanctions and the subsequent increases in energy prices have weakened the Euro, to the point that last week it reached parity with the US dollar for the first time in more than twenty years.

The Euro is not the only currency the US dollar has made gains against since the covid-19 pandemic began.

Who is gaining for these market conditions?

For those in the US hoping to purchase luxury goods from other countries, a strong dollar will make these products cheaper. For instance, those who may want to import a luxury car from Europe, are paying nearly the same as European consumers as the two currencies are hovering around the same value.

The same applies to US businesses who may be paying less for imports. This could in the long-run help to decrease inflation as firms see costs decrease which could allow them to lower the prices of their goods. However, the inverse is true for exportsd which become more expensive to send abroad.

Economic slowdowns driving slump in price of crude oil

Crude oil prices are rising again with the barrel hovering around $105. This is up around three dollars compared to this time last week. There are growing concerns that supply will remain tight and could lead to further price increases. As the Russian invasion of Ukraine continues, there are fears of energy shortages come the winter.

Here is where the prices stood at the end of trading on Wednesday...

Historic revenues in the oil and gas sector

These prices are up compared to this time last week. All of these fluctuations come as “53 US exploration and production (E&P) companies reported both higher revenue, resulting from increasing crude oil prices” during the first quarter of 2022. The US Energy Information Adminstration has reported that many of these companies have used these historic revenue levels to complete stock buybacks and distribute dividends. Additionally, the agency also reportd that “the aggregate valuation for these companies has increased to just below the previous five-year (2017-21) high.”

For one example, Exxon Mobil expects it will