Dollar’s Relentless Rally Set for a Boost From Higher Oil Prices

Surging oil prices are set to power the next leg of the dollar rally, as the US economy benefits from its rise as an energy exporter.

Strategists at firms including Societe Generale SA and State Street Trust & Co. expect the greenback to extend its longest weekly rally on record as the outlook for higher crude prices boosts the world’s largest economy.

Unlike major countries in Europe and Asia, the US exports more oil and gas than it imports. So while rising energy costs threaten to weaken other economies — dragging currencies like the euro and the yen lower — the dollar actually stands to benefit, according to strategists at these firms.

“In this environment, you don’t sell the dollar,” said Societe Generale strategist Kenneth Broux. “Oil poses challenges for the euro and the yen to reverse the weakening trend versus the dollar.”

Broux forecasts the euro to drop to $1.05 this month from the current $1.07.

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