Last week, the Euro rallied against its US counterpart, after the European Central Bank (ECB) hinted in the minutes of its December meeting that it could be gearing up to trim its massive monetary stimulus. ECB policymakers said that they could revisit their communication stance in early 2018, boosting expectations that they are preparing to reduce their vast monetary stimulus program. Investors took the relatively hawkish statement as a further signal that the ECB will wind down its 2.55 trillion Euro Bond purchase scheme this year if Europe’s economy continues to hum along.
Meanwhile, the US Dollar slumped against its major rivals, after the release of weaker than expected US producer inflation data. The Labor Department said last Thursday that its producer price index for final demand slipped 0.1% last month. That was the first drop in the PPI since August 2016 and followed two straight monthly increases of 0.4%. Investors await for the release of Consumer Price Index inflation data for the month of December 2017, and the Index of Industrial Production numbers for November 2017, due later today.
Last Friday, Brent prices topped $70 a barrel for the first time in three years, as production cuts by OPEC and rising demand whittle away at the global surplus. Oil’s rally shows that the Organization of Petroleum Exporting Countries and its allies are succeeding in clearing the glut triggered by the growth of US Shale Oil. Prices have also been supported by concerns that supply disruptions could stem from rising political tensions in OPEC members Iran and Venezuela.