On the relation between oil price and U. S. dollar: a review

The aim of this paper is to analyze in details the relation between crude oil price and U. S. Dollar value by using econometrics methods. Starting from previous studies which show the existence of a strong correlation between these two variables, this work concerns if and how the two variables move together. Besides and, in particular, the goal is to find the direction of causality, in order to construct a model for the relation, thanks to the regression analysis and the GARCH modeling, as well as to clarify what is the real mechanism on the markets that explain the relation and its dynamics. Given the accuracy and the number of the data used for the analysis, our results reject the cointegration - previously found by many authors - but we detect a confirmation of the statement of the financial theory: the causality of the relation runs overall from dollar value to oil price, in terms of variations of the two variables.