The surprising rise in inflation in the euro zone has fueled speculation on the foreign exchange market that the European Central Bank is about to tighten monetary policy. This gave the euro a boost on Wednesday, peaking at more than half a US cent at $1.1328. Exploding energy prices drove consumer prices in the euro area to a new record high at the beginning of the year. In January, goods and services rose by an average of 5.1 percent compared to the previous year. The main drivers were the sharp rise in energy prices. Consumers had to pay almost 29 percent more for this in January than a year ago. Political tensions in Ukraine are likely to drive up oil and gas prices even further, according to Achim Wambach, President of the Center for European Economic Research. Robert Greil, chief investment strategist at Bankhaus Merck Finck, said: “Since core inflation is declining without the sharply fluctuating prices for energy and food, the pressure on the ECB to act is lower than might be assumed at first glance.
Meanwhile, investors were anxiously awaiting the deliberations of the major oil exporters on funding policies. The refusal of Opec Plus to significantly increase oil production volumes drove the prices for the Brent and WTI varieties by around 1.5 percent to $90.49 and $89.72 per barrel respectively. For the latter, this is the highest level for seven and a half years. According to insiders, the major exporting countries want to raise quotas by 400,000 barrels a day, as in the past few months. Some of the oil states have been missing their quotas for months because of ailing production facilities.
The weakening dollar supported the price of gold. The precious metal again cost a little more than $1,800 an ounce.