Speculation by some investors on signs of tighter monetary policy in the euro zone pushed the euro higher on Tuesday. The common currency temporarily rose by half a cent to $1.1278. On the bond market, speculation caused rising yields. The ten-year federal bond yielded 0.041 percent, which is the highest value since May 2019. Investors were looking forward to the meeting of the European Central Bank, which is scheduled to take place this Thursday. The focus here is on how the ECB will react to the issue of inflation. Katharine Neiss, economist at the asset manager PGIM, said that further support for the economy through an expansion of bond purchases is currently more necessary than turning the interest rate screw.
Meanwhile, Russia’s national currency recovered on the back of efforts to resolve the Ukraine crisis. In return, the euro fell by half a percent to a good 86 rubles. Western states want to bring new impetus to the deadlocked negotiations with a series of talks with Russia. However, analysts warned that sanctions rhetoric could continue and recent market gains could erode in the blink of an eye.
On the oil market, investors bet on a faster increase in production through Opec-Plus and thus eased the oil price slightly. Brent oil in the North Sea fell by one percent to $88.37 per barrel. On Wednesday, the oil-exporting countries and their allies discussed whether production could be increased more than expected. “Given the pace of the recent rally and likely pressure from importing countries, we see growing potential for a faster rate hike at this meeting,” Goldman Sachs experts said.