Fresh inflation data is weighing on the shared currency, which is trading well below the $1.05 mark. Federal bonds, on the other hand, are in demand, which pushes their yields down.
On the foreign exchange market, the euro fell below the $1.05 mark again on Wednesday. In the evening, the common currency was quoted at $ 1.0441. The surprisingly low inflation in Germany only helped the common currency to make slight gains for a short time. Experts assessed the drop in the inflation rate in June to 7.6 percent as a temporary effect caused by the fuel discount and the nine-euro ticket. The pressure on the European Central Bank to significantly increase key interest rates therefore remains high. After consumer prices were published, investors turned to German government bonds. In return, the yield on the important ten-year federal bond fell from 1.64 percent to 1.51 percent. Fears that the supply of crude oil could tighten drove oil prices higher. A barrel of Brent oil from the North Sea increased in price by 1.8 percent to $ 120.10. Concerns about a shortage due to Western sanctions on Russia outweighed fears of weakened demand in the wake of a possible recession. Then, late Wednesday night, the latest data on US oil inventories pushed crude oil prices back down.
The ruble rose to its highest level in more than seven years. The Russian currency was supported by capital controls. In addition, demand for foreign currencies within Russia is weak. However, the ruble’s gains crumbled during trading after Russia’s finance minister hinted at possible intervention to ease upward pressure. Thanks to measures designed to protect the Russian financial system from Western sanctions, the Russian ruble is the currency with the highest appreciation so far this year.