The dollar plummeted Wednesday against major and emerging market currencies as the prospect that U.S. interest rates would remain at record lows encouraged investors to seek higher returns elsewhere.
The euro hit a 15-month high above $1.45, while rising commodity prices and inflation sent the Canadian and Australian dollars to multi-year peaks. Against major currencies, the greenback had its worst day in a month.
Perhaps more crucially, traders said, the dollar extended a multi-week slide against large emerging currencies, hitting two-year lows against the Brazilian real and Mexican peso.
http://www.cnbc.com/id/42671241
Yikes, a two year low vs. the Mexican peso???
$6 Gas? Could Happen if Dollar Keeps Getting Weaker
A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions.
With the greenback coming under increased pressure from Federal Reserve policies and investor appetite for more risk, there seems little direction but up for commodity prices, in particular energy and metals.
Weakness in the US currency feeds upward pressure on commodities, which are priced in dollars and thus come at a discount on the foreign markets.
One result has been a surge higher in gasoline prices to nearly $4 a gallon before the summer driving season even starts, a trend that economists say will be aggravated as demand increases and the summer storm season threatens to disrupt oil supplies.
"All we have to have is a couple badly placed hurricanes which could constrain some of the refinery output capacity in some key locations," says Richard Hastings, strategist at Global Hunter Securities in Charlotte, N.C. "If you get weakness in the dollar concurrent with the strong driving season concurrent with the impact of one or two hurricanes in the wrong place, prices could go up in a quasi-exponential manner."
http://www.cnbc.com/id/42683030
In another thread we were talking about speculators.. can't remember if it was mentioned, but a further weakening dollar directly relates to oil which is priced in dollars. As our currency devalues, oil becomes more expensive to us regardless of supply issues.
Sounds like a perfect storm brewing.. crashing currency, investors choosing to invest anywhere but here, middle east turmoil, rising oil demand from China and the developing nations, Saudi Arabia cutting production by a million barrels per month, speculators running up futures with free money from Uncle Ben, and top of all that.. peak oil.
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