Weak Dollar Supports Manufacturing

June 30, 2025 

The US dollar continues its dip against major currencies. The dollar index is down 10% this year and has reached its lowest point since 2022. What does it mean for energy prices?

US natural gas prices are largely uncorrelated to the US dollar, reports UBS. “The US has been historically self-sufficient in terms of natural gas, so prices are mainly a domestic story. Despite rising US exports of natural gas by pipeline to Mexico and, lately, via liquefied natural gas (LNG) export terminals to the rest of the world, the correlation has remained close to zero.”

Natural gas prices remain a function of market supply and demand, according to the EIA. Because there are limited short-term alternatives to natural gas as a fuel for heating and electricity generation during periods of high demand, changes in natural gas supply or demand over a short period may result in large price changes. Prices themselves often act to balance supply and demand. Increases and decreases in prices tend to reduce or increase supply and demand.

Some analysts are concerned that tariff policies and shifting directions from Washington have hurt confidence in the dollar’s strength. Conversely, some economists point to a weakened dollar as a positive opportunity for US manufacturing, which could lead to increased electricity demand and, ultimately, a bump in natural gas demand and prices.

Crude oil, however, is another story. Oil prices have historically held a significant negative correlation to the greenback. A lower dollar means higher crude prices.

For more:
https://www.ubs.com/us/en/wealth-management/insights/article.1881784.html