"The latest report for the S&P Case-Shiller Home Price Indexes showed another small monthly gain in October for the 20-city index, up 0.37 percent on a seasonally adjusted basis or a gain of 0.05 percent when seasonal factors are not taken into account. On a year-over-year basis, prices are now down 7.3 percent and indexes for all 20 cities are shown below."...
2008-2011: Value of the Dollar vs. Price of Oil
"A consequence of the Federal Reserve’s policy of easing was to put downward pressure on the value of the dollar. The chart [above] shows the trade weighted value of the dollar since the announcement of QE1 in November 2008 as well as the price for Brent Crude Oil. Since that announcement the trade weighted value of the dollar has declined approximately 14 percent.
How has the U.S. Dollar’s Decline Affected the Price of Oil?
In much the same way that one can use the Consumer Price Index (CPI) to measure the cost of living, one can index the price of oil, an international commodity, to the value of the dollar measure the impact of the dollar’s declining value on the price of oil. The chart [above] tracks the dollar price of oil and shows the price based on indexing the dollar to its trade weighted value when QE1was announced by the Federal Reserve.
Estimating the Effect of the U.S. Dollar’s Decline on Gasoline Prices
Arguably, there are other factors affecting the price of gasoline than just the price of oil. However, the retail price of gasoline in the United States moves in tandem with the price of oil. In fact, the correlation between the two is greater than 98%. Given that oil is the primary input to gasoline and the close correlation we can perform a similar analysis to determine how much of the current price of gasoline is attributable to the declining value of the dollar.
…In other words, the dollar’s decline [since QE1 in 2008] accounts for 56.5 cents of the $3.963 current price of gasoline."
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