Dollar Loses Momentum
LiteForex Europe | Jun 17, 2013 02:40AM ET
On Monday, the Japanese Yen held a near two-month high against the Dollar and the Euro in the early Asian session, amid market hysteria and confusion over when and how the U.S. Federal Reserve (FED) will begin to scale down its massive stimulus program. The USD/JPY opened at the same level as it ended in New York on Friday, where the Dollar bought 94.23 yen. Since the opening, the yen has weakened to 94.77. The EUR/USD trades steady at 1.3322, as French President Holland’s Socialist party asks for a weaker euro.
The Dollar lost momentum during volatile sessions last week, which saw sharp moves in the yen and emerging market currencies. Stronger retail sales and lower weekly jobless claims released last Thursday helped the gree back rise from months of lows. However, negative consumer confidence figures published on Friday affected the USD negatively. The Dollar index, weighed against a basket of currencies, is at a four month low. Both the euro and GBP are at their strongest level against the dollar since February.
Oil prices rallied to a two month high after Washington’s announcement that it would provide arms to Syrian rebel groups. New York Crude, NYMEX, trades at USD 97.63 a barrel and Brent is above 105. The Syrian crisis going to be at the top of the agenda when the G-8 meets today. The civil war is threatening the stability in neighboring Countries such as Jordan, Iraq, Lebanon and Turkey and challenges Israel’s security. The conflict threatens to develop into a regional Russia/U.S. proxy war, with Iran directly involved.
In a price analysis, Barclay’s bank forecastcrude oil prices to retrace to USD 111 a barrel, taking supply shortfalls as well as geopolitical tensions into consideration. The Bank estimates supply shortfalls from OPEC (Organization of Oil Producing Countries) to be 2 million barrels a day, or equal to Germany’s oil imports. Libyan oil output has fallen below 1m barrels a day due to protests at oil fields and terminals. Nigeria’s output has fallen due to theft-related damage to pipelines.
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