We've been observing only volatility around the FOMC as a buying opportunity on the dollar. Even if they don't go now, they are in the process of preparing the ground to do so. On that basis, any kind of dip in the dollar could prove short-lived. Just in the absence of a rate rise, only an extremely dovish message seems to hold much danger for the dollar. Usually, if rates rise, oil would be expected to fall, as a stronger U.S. dollar (which would be forecast to follow a Fed rise) strikes demand from importing countries.
Hence, Yesterday's gains of WTI CL futures have trimmed up to 46.33 but managed to maintain yesterday's gains at 47.26. The interaction between what central banks can and will do, and the price of oil, has been close - some might argue too close.
Oil's relatively low cost, and its dampening effect on inflation, has been one of the key factors holding back central banks across the West from raising rates and returning to normal monetary policy in the post-financial crisis world. The traders and analysts are reluctant to take any decisions on whether oil prices will continue to rally without a decision from the Fed.
