Euro Steadies Near Three-Year Highs

The euro hovered near three-year highs on Tuesday, bolstered by continued optimism about potential ECB policy that could reduce the bank’s current stimulus policy. The euro was up a modest 0.01 percent against the dollar to $1.2262 as of 1:44 p.m. HK/SIN, and it also gained against its other primary trading partners including the British pound, the yen and the Swiss franc. On Monday, European Central Bank rate-setter Ardo Hansson commented that if the economy and inflation continue to develop as expected, the ECB’s bond purchasing program could be ended all at once, perhaps as early as September. The euro was also buoyed by data confirming that the eurozone enjoyed its highest trade surplus in eight months, a sign that the common currency was managing its own strength in a healthy way.

The dollar continued its sluggishness on Tuesday, down against the pound and the Canadian dollar, but managing to eke out modest gains against the yen, to trade at 110.90. As reported by Marketwatch the dollar index was up 0.05 percent to 90.50 in the early afternoon in Asia.

Commodities Movements

Brent crude futures hovered near the $70 mark on Tuesday after hitting a high of $70.37 per barrel on Monday, a high not hit since December 2014. U.S. WTI futures were up 0.33 percent to $64.51 per barrel. Investment houses Bank of America Merrill Lynch announced that it updated its supply/demand balances to reflect the expedited tightening in the global oil market which has been caused by OPEC’s production cuts and weather-related cutbacks. As reported by Reuters, Morgan Stanley has also predicted a deficit in 2018, with an expected price of $75 per barrel by Q3 2018. Oil prices have also been supported by the weak dollar in recent days. Skeptics, however, remain worried that prices will reverse, citing Trump’s increased production plans as a primary factor to drive prices lower. Still, instead of hitting 10 million barrels per day in January as previously expected, the U.S. cut production to 9.5 million barrels, supporting the price tightening, at least for the moment.   

Sara Patterson
Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.