USD Rises Versus Majors as Oil Rebounds

The dollar edged higher against its main rivals Tuesday as crude oil prices rebounded, modestly diminishing investors’ appetite for haven currencies like the Japanese yen and the euro.

The dollar  rose to ¥118.5430 from ¥118.30 late Monday in New York. The euro  weakened to $1.0826, from $1.0854 late Monday.

The ICE U.S. Dollar index , a measure of the dollar’s strength against a basket of six rival currencies, was flat at 99.3670.

Global stock markets broke with the familiar trading pattern that has emerged in recent weeks, as European  and U.S. shares  rose despite a 6.5% slide in the Shanghai Composite to a 13-month low.

Oil remains the primary driver in equity and currency markets, said Jane Foley, senior currency strategist at Rabobank. The commodity has become the primary arbiter of risk sentiment in a market that tends to lump assets into one of two categories — risk-on or risk-off. Risk-on assets like stocks rise when oil does, while risk-off assets like bonds rise when oil falls.

This correlation with oil prices could led to intense volatility in financial markets this year, Foley said.

“This could certainly be a volatile year for many currencies. Certainly for the first half of the year,” she said.

Crude-oil futures traded back above $30 a barrel after sliding on Monday. Brent crude  , the international benchmark, traded at $30.91 a barrel, up 1.3% on the day, and off a low of $29.27 earlier in the day. West Texas Intermediate crude, the U.S. benchmark , rose 0.7% to $30.56 a barrel, after earlier trading as low as $29.25.

via Marketwatch

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.