The dollar weakened significantly at the end of the week. After hitting a 20-year high against other major currencies on Wednesday, the greenback saw profit-taking on Friday. In return, the euro rose by half a percent and was quoted above parity again at $1.045. After the historically significant interest rate hike by the European Central Bank, the common currency initially came under pressure the day before. Normally, rising interest rates increase the attractiveness of a currency from the investor’s point of view.
Many investors took advantage of the dollar pullback to buy metals. Copper rose by more than 1 percent to $8,007 a ton and gold by 0.6 percent to $1,718 a troy ounce. The devaluation of the world’s leading currency makes commodities more attractive for investors outside the USA. According to stockbrokers, the industrial metals are also benefiting from the slowdown in inflation in China. This dampens speculation of lower demand in response to higher prices.
In the aftermath of the ECB’s sharp hike in interest rates, many investors again parted with shorter-dated bonds in particular. This drove the yield on two-year Bunds up to 1.419 percent and thus to the highest level in eleven years. The ten-year German government bonds yielded 1.796 percent at times.
Prices went up on the oil market. A barrel of North Sea Brent cost $91.90, 3.1 percent more. Despite the increase, the weekly loss was 1.5 percent. Prices are currently hovering near multi-month lows. A barrel of Brent costs about as little as it did in February. The background to the development is increasing economic fears, the strict fight of many central banks against high inflation and China’s strict corona policy.