Forex, Bonds, Commodities – Euro at 3-Month High – Economy

The prospect of more aggressive monetary policy as a result of high US inflation scares investors only briefly. The dollar turns negative, which heaves the euro up. Selling pressure remains high in the bond market.

The surprisingly high US inflation irritated investors on the financial markets only briefly. Inflation in the US rose to its highest level in 40 years in January. “The bare numbers are no longer a surprise for the market,” said analyst Konstantin Oldenburger from online broker CMC Markets. “Rather, the question now is what the Fed’s actual response will be.” Investors assumed that the US Federal Reserve would not risk a recession if it tightened its monetary policy. Against this background, the dollar was unable to maintain its interim gains and slipped into the red. In turn, the euro rose to a three-month high of $1.1495.

However, selling pressure remained high on the bond market. As a result, the yield on ten-year US bonds exceeded the two percent mark for the first time since the beginning of August 2019 and rose to 2.028 percent. The ten-year federal bond yielded 0.3 percent, the highest it was three years ago.

After initial fluctuations, prices on the oil market went up again. Unexpectedly falling US oil inventory data provided support here. In addition, investors continued to look to the nuclear negotiations with Iran. It is unclear whether Iran will return to the nuclear deal and thereby be able to offer its oil again on the world market, said analyst Henry Rome from the consulting firm Eurasia. The price of the North Sea Brent rose by 1.5 percent to $92.95 per barrel.

Meanwhile, the aluminum rally continued due to impending supply bottlenecks. The metal used in automobile and aircraft construction rose by 2.1 percent and, at $3,333 a ton, was the most expensive since the summer of 2008. Chinese companies had cut back their production. China is the world’s largest aluminum producer.

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