The Oil Drum: Australia/New Zealand

The bailout of Freddie and Fannie has just been announced by Hank Paulson, with supporting words from Bernanke. What's interesting in what's proposed, as usual, is what's unsaid. This would seem to be an incredibly ambitious gambit: a nationalisation, an attempted bailout of ALL the banks, and an open-ended commitment of taxpayer money to save the financial world.

The US Dollar Index (USDX) is a measurement of the strength of the Dollar against six other freely exchangeable currencies. Since 2002 the Dollar embarked in a secular downward trend that brought the greenback to historic lows today.

The USDX secular trend and rDollar channel since January of 2007. Click to enlarge.

On the back of a 2% rise in the price of oil and 0.44% fall in the value of the UK pound against the US dollar today (Wed 29th Mar 05) I believe we have a new record price for oil when the US dollar price of West Texas Intermediate is expressed in UK pounds (hat tip ianbeale). Is this significant? I'm not sure - but I am surprised by the total lack of coverage of the high oil prices on television media today.

Today's $65.72 and 1.73515 dollars to the pound results in a value of £37.88 a barrel. With a stronger pound during the spike after Katrina the price only just crept above £37 and compared to May 2005 the ~$50 oil and exchange rate of over 1.9 resulted in a UK pound price of approximately £26.30. In less than a year prices when looked at like this have increased some 44%. Luckily the UK doesn't have to buy much US dollar denominated oil with UK pounds.

Graphs show dollar denominated oil prices and the dollar-pound exchange rate over the last year.

Click graphs to enlarge (source: BBC Market Data)