Investors bought euros in anticipation of an imminent interest rate turnaround by the European Central Bank (ECB). The common currency appreciated to $1.0590 from $1.0499 previously. These speculations were fueled by statements by French central bank chief Francois Villeroy de Galhau. He called for an end to asset purchases in June and an increase in the deposit rate. “If no unforeseen new shocks occur, I would think it is realistic that we will be in positive territory by the end of this year,” said Villeroy de Galhau, who has a say in the ECB Council on monetary policy, on Friday in Paris. The deposit rate, which has been particularly important for a long time, is currently minus 0.5 percent. At the deposit rate, banks can park excess liquidity with the ECB. Villeroy was less precise about the exact timing of a first rate hike. “I would not rule out the next meetings of the Governing Council.”
Investors parted with government bonds on the bond market – this drove the yield on ten-year German bonds to 1.16 percent, the highest level since August 2014.
Oil prices continued to rise from high levels. A barrel of North Sea Brent cost $113.25. That was 2.1 percent more than the day before. Prices have risen sharply since the EU Commission proposed an embargo on Russian crude oil. They have risen by a good 40 percent since the beginning of the year. The announcement by the USA on Thursday that it would start refilling its strategic oil reserves in the fall provided additional impetus. They are at relatively low levels because the US government has injected oil into the market several times in recent months to curb rising prices.