Euro Reaches Four-Month High Against USD, Oil Up Over Drop in Crude Inventories

The euro had reached a four-month high against the dollar on hopes European Union leaders may agree on stimulus and a deepening fiscal integration to aid the pandemic-stricken economy at its summit this week.

The euro had risen to $1.1400 after reaching its highest level since March 10th, and the currency’s strength had pushed the greenback to its one-month low of 96.056, following in its losses after the announcement that US consumer prices rebounded 0.6% month-on-month - the most in almost eight years.

The news of progress on the COVID-19 vaccine have also made investors more prone to risk assets, leaving the dollar behind. Moderna Inc’s experimental vaccine had been proved safe and provoked responses in all 45 volunteers in an ongoing early-stage study on Tuesday.

For news on oil - investor sentiment has improved with regard to the commodity after US had reported a significant drop in crude oil inventories. The American Petroleum Institute (API) estimated a 8.322 million-barrel draw for the week ended July 10th, going way over the forecasted 2.1 million-barrel draw. 

As a result, WTI had gained 0.55%, settling at $40.51, while Brent futures had risen 0.54% to $43.12.

Amid the worsening COVID-19 situation, OPEC+ is expected to further step up oil production cuts beyond their July expiry date. The meeting later today will decide whether to extend output cuts of 9.7 million barrels per day (bpd) due to end in July or to decrease the cuts to 7.7 million bpd.

Investors will also be looking at data from the US Department of Energy’s Energy Information Administration (EIA) due Wednesday, to see if it supports the API data.

*The products advertised are only available to clients under Fondex Limited Seychelles (SDL No: SD037).