Changes in oil prices and USD
The United States dollar reached another low point it has never experienced before and the oil prices came closer to the price of $120 a barrel. The matter is that it is quite difficult to determine the initial reason of all changes when considering the US dollar and oil prices as low dollar leads to the growth of the oil prices and the oil prices affect the country economy. We cannot state with 100% confidence that high oil prices are caused by high inflation level as the situation is quite complicated and the Federal Reserve cannot afford interest rates hike to restrain the inflation.
Moreover the main trouble the Federal Reserve is facing at the moment is the consequences the $5 gas prices may cause in the amount of consumer spending and corporate profitability. The pressure of the inflation continues to grow, several big companies like Mattel, MTA (Metropolitan Transportation Authority) reported about the raising their prices.
As for the situation at the housing sector it is not the worse one as we can see considering the related data issued recently. The numbers of the reported turned to be a bit higher than it was expected (i.e. existing homes sold absolute number). And the prices at the housing sector increased a bit. However the problems at the housing market are quite obvious and it seems the economy of the country will come to the growth period only after the recession will come to the end.
(C) 2008 All About Forex
