Oil, Dollar Attempt to Steady After Decline

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Markets attempted to recover from the pre-Christmas declines seen on Monday, though thin post-holiday trading did little to aid in the recovery. Despite lingering concerns about a global economic slowdown, US WTI futures were up 0.33 percent as of 2:06 p.m. HK/SIN, to trade at $42.68 per barrel. Brent crude futures, however, were still trading lower, easing 0.36 percent to trade at $50.29 per barrel. Oil prices are expected to strengthen further after OPEC’s production cuts go into effect on January 1, but their direction until that time remains in question, especially during the thin holiday trade.

The US dollar index was modestly higher as well, after the currency hit fresh lows before Christmas. The dollar index was up 0.07 percent to 96.62 .DXY on Wednesday afternoon, though the greenback was unable to advance against all of its primary trading partners. The dollar was trading at 110.43 against the yen, up 0.15 percent. It also continued to rise against the Canadian dollar, trading at $1.3602. However, the dollar continued to weaken against both the euro and the British pound.

Despite the dollar’s small rebound, traders remained concerned that the currency is not in the clear, and that it will continue to struggle in the near-term thanks to continuing rifts between Washington and Beijing and in-fighting within the US government, both between President Trump and the Federal Reserve and between policymakers in the legislative branch who hasn’t yet been able to come to an agreement on critical budgetary issues. Falling bond yields have also plagued the dollar in recent sessions.

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.