OilAndMoney

U.S. Dollar versus West Texas Intermediate Crude

Above is a seven‐year chart showing the U.S. Dollar Index plotted along with an actively traded crude oil futures contract. It is easy to see the negative correlation between the U.S. dollar and oil, where oil bottoms as the U.S. dollar peaks and vice versa. This inverse relationship has existed for decades. Since commodities and oil are priced in U.S. dollars, a rising U.S. dollar causes these commodity prices to fall. If crude oil prices can remain above $70/barrel, then this chart signals that we should see oil rally in the coming weeks. As is evident, the U.S. dollar is coming up against old highs established in 2010 and 2009. At that level, the U.S. dollar could reverse down, and produce a rally in oil (and possibly other commodities). Since 2011, we have also seen a positive correlation between commodities and equities, the implication being, higher commodity prices generally signal higher future production activity. So we believe a rally in the oil/commodity complex could put some wind in the back of the U.S. stock market.

Past performance is not indicative of future results. The opinions expressed are those of the Clark Capital Management Group Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Nothing herein should be construed as a solicitation, recommendation or an offer to buy, sell or hold any securities, other investments or to adopt any investment strategy or strategies. This material is not intended to be relied upon as a forecast or research. All material is compiled from sources believed to be reliable, but accuracy cannot be guaranteed.

Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services can be found in its Form ADV which is available upon request.

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