The dollar stands to gain from exports of petroleum products, these strategists say.
If you're like many currency traders, you've spent serious quality time focused on developments in the euro zone - right? Well, Robert Sinche and Brian Kim of RBS say it's time to shift gears.
If “Greece is (was) the word” of 2010…and 2011…and early 2012, “nat gas” may be the new “word” in the global macro environment," they wrote in a note to clients.
Sinche and Kim argue that rising energy prices, and the pickup in American energy self-sufficiency and petroleum-product exports, will have a hidden but significant impact on the U.S. trade deficit with developing countries.
"Should the increasing importance of natural gas in US energy consumption (and exports) continue to grow, the US trade deficit in the energy sector could narrow in the years ahead at the same time that the US imbalance in other goods and services versus, particularly, the emerging world narrows," they say. In other words, the U.S. trade deficit with emerging-market countries will shrink - and that will support the dollar.
Other long-term factors could also help the trade deficit and the dollar, these strategists say. For example, an aging population will be more likely to save, reducing demand for imports. But in their view, energy will provide key support: "Major developments in the energy markets in the US could have wide-ranging impacts on the US economy during the years ahead – both internally and externally. And developments in the energy sector could be part of a broader improvement in the fundamental backdrop for the USD."
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