Tuesday, the U.S. dollar dropped to a 10-month low, against a group of the dollar’s major currency rivals the dollar sank to a low of 94.75 from its 14-year peak of 103.82 touched on January 3.
The greenback has lost an approximately 8.4% which is staggered by the uncertainty over the pace of the Fed’s policy tightening, as well as the hesitation that the United States President: Donald Trump will fail to deliver the healthcare reforms as Republican Senators: Jerry Moran and Mike Lee have announced their opposition to a revised Republican healthcare bill.
In accordance to this, the feeble reading on the United States inflation and retail sales on Friday also fanned speculation that the Federal Reserve may not have the explanation for another rate increase by the end of 2017; this is despite policymakers’ projection for such a change, in addition, Yukio Ishizuki, Daiwa Securities’ senior currency strategist said that a lot of countries are catching up with the United States in terms of tightening in Monetary Policy, and that it is natural and expected for the greenback to lose its advantage.
Along with the strong consumption yet weighed by ongoing oversupply from OPEC as well as the United States, oil prices remained stable on Tuesday. Brent crude futures were trading at $48.55 a barrel, which is up by 0.3% or 13 cents from their last close. The United States Texas Intermediate on the other hand was up by 10 cents or 0.2% and was trading at $46.12 per barrel.
This positive movement of oil prices was a result of strong demand, as refineries in China increased crude demands in June to up to the second highest on record. This is despite of the deal OPEC has agreed to cut down supply by around 1.8 million barrels per day, hoping that by doing so, imbalance between the market’s supply and demand will be fixed, and achieved higher prices that manufacturers are hoping for.