Thursday, the greenback tumbled against the euro and the British pound in Asian trading. The euro was slightly higher on the day at $1.1375 EUR= after scaling a peak of $1.13915 on Wednesday. The sterling was up by 0.1% at $1.2940 GBP= . This is after spiking to $1.2971 on Wednesday, which is considered as its highest point since June 9.
Looking upon the dollar index, which tracks the currency’s stance against its six major rival currencies, the greenback remained stable during the day at 96.019.DXY, but well below highs above 97.0 hit earlier this week.
Bill Northey – chief investment officer at U.S. Bancorp Wealth Management in Helena, Montana – said that the dollar’s decline is broadly due to the reevaluation done by investors regarding central banks’ possible intention to take away quantitative easing. This is as Mario Draghi, European Central Bank’s President, hinted that the ECB could trim its stimuli plan this year.
In addition, the Bank of England’s Governor, Mark Carney, said on Wednesday that the central bank might need to raise interest rates as the British economy came closer to operating at full capacity. This comments strengthened the British Pound.
The Organization of Petroleum Exporting countries seems to be failing to balance the oil market despite of the global agreement that made several oil manufacturers from different countries pledge for oil supply cut. Despite that, OPEC surprisingly appears to be reaping tidy profits. The organization has earned $1.64 billion a day so far for this year. This numbers indicate an increase of more than 10% from the second half of 2016. Compared with the first half of 2016, the increase in income was 43%.
Income could rise even further in the rest of the year if the supply gut is well handled. Algeria’s former oil minister, Chakib Khelil, said that he expected gains for OPEC to be higher during the second quarter of 2017. This is despite an oversupply from non-OPEC producers and higher than expected oil production from Libya and Nigeria.