Oil and US Trade weighted Index Relationship

The below plot is a bi-density chart of the WTI spot rate versus the Fed USD Trade weighted index (Weekly data since February 1986). The contour lines delimit the empirical joint distribution. The yellow line is the best fit derived from a quantile regression. The dotted red lines delimit the quantiles for the Oil price. The bold red cross hair lines show where both the USD TWI and the oil Price is at the most recent point….

plot of chunk bidensity2