The euro advanced by 0.1% to $1.1345, having hit a high of around $1.1355 earlier on Wednesday. It was considered the currency’s strongest level since August of 2016. From a weekly perspective, the European currency gained 1.4%.
The shifts in the euro’s value came as ECB President, Mario Draghi, noted on Tuesday that deflationary forces had been replaced by reflationary ones. However, given these claims, Draghi also said that any change in the ECB’s stance should be gradual as significant monetary support was still needed and the recovery in inflation would also depend on favorable global financing conditions.
Tareck Horchani, head of sales trading for Asia-Pacific for Saxo Bank Group in Singrapore said that with the aggressive tone of Draghi, they should expect to see European rates ascending, especially on the 10-year part of the curve, and so that the euro has the potential to move higher.
Despite of this month’s crude CLc1 price drop, the United States shale oil manufacturers plan to keep drilling new wells but expect to rethink this policy should pricing remain below $45 a barrel for several months. Tim Dove, chief executive of Pioneer Natural Resources Co pointed out at a J.P Morgan energy conference in New York that they would not drill into oblivion.
This is to give confidence and reassurance to investors, as Pioneer is confident that OPEC’s de-facto leader, Saudi Arabia, will not let oil prices remain near current levels for too long.United States oil prices closed Tuesday at $44.24 per barrel, which is up by 2% but down from April’s high.