As the major currency in the market, the price of the USD can affect other commodities. It can make currency is up or even down. It also happens in the oil prices lately. The price of oil was known strengthening since the USD is felt off.
Oil prices rose on Tuesday. That was reversing overnight losses against the backdrop of rising equities and a decline in the US dollar. Brent crude LCOc1 futures were up 63 cents to $45.91 for a barrel at 1344 GMT. WTI also has the same trend.
The US West Texas Intermediate (WTI) crude futures were up 51 cents. It was reaching $ 43.12 a barrel. The dollar is at its lowest level in more than two years against major currencies. It was pressured by the US Federal Reserve's easing inflation policy last week.
Strong Chinese Manufacturing Data also Lifted Oil Prices
The Caixin / Markit Manufacturing Purchasing Managers' Index (PMI) showed Chinese factory activity expanded at the fastest pace in nearly a decade last month, supported by the first increase in new export orders this year.
But oil, which often moves alongside equities, remains restrained by demand concerns recently. PVM analyst, Tamas Varga, said that oil prices are likely to move below their recent levels. It was citing a sizeable downward revision to second-half demand forecasts.
It just likes what was said by the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC). In a Reuters poll of 43 analysts and economists, global oil demand was seen shrinking between 8-10 million barrels per day (BPD).
The July consensus was 7.2-8.5 million BPD. Brent is expected to average $ 42.75 per barrel in 202. That was compared with the average price of $ 42.60 so far this year. Brent's average is expected to reach $ 50.45 by 2021.
The Lowest Level of Dollar
The dollar hit a more than two-year low and a four-month loss in a row on Monday. It was following changes to the US Federal Reserve's policy on inflation. As you know that this speech is very important. This trend was also caused by the pandemic.
Against several currencies, the dollar was down 0.15% at 92.097 in midday trade. It happened after previously hitting its lowest level since April 2018. The dollar fell 1.24% for the month, marking the worst month of August in these five years period.
It becomes the longest monthly loss since then in the summer of 2017. The euro, which makes up the majority of the dollar index's weight, was up 0.35% at $ 1.195. This data happened after rising 1.45% in August which means the fourth straight month of gain.
Investors adjusted to a speech last Thursday in which Federal Reserve Chair Jerome Powell outlined an accommodative policy change believed. That makes a change in inflation moving slightly higher and interest rates remaining lower for longer. That speech really has a wide effect.
Dollar Downtrend Due to Powell's Statement
Powell's statement last week continued the dollar's downward trend. The Fed's stimulus to offset the economic effects of the coronavirus pandemic has pushed risk assets higher and hurt the safe-haven dollar.
The yen weakened 0.48% to 105.84 per dollar on the view that the next Japanese leader will remain on the path of the 'Abenomics' economic revival program. The yen rose to 104,195 on Friday following Shinzo Abe's resignation as prime minister for health reasons.
The interesting situation happened because of the release of US stockpile data from the American Petroleum Institute, due for release at 2030 GMT. A Reuter’s poll found that analysts expect US crude stockpiles to have fallen by about 2 million barrels in the week to August 28.
