Last Friday, the Dollar slumped near its lowest levels in more than 2-1/2 years as the Euro continued to shine after European Central Bank President Mario Draghi’s suggestion that the ECB may begin tapering its massive stimulus program this fall. Draghi referred several times last Thursday to the Euro’s strength, and said it was the main reason for a cut in the bank’s 2018-2019 inflation forecasts. He also indicated any winding down of its massive stimulus program was likely to be slow. Meanwhile, stubbornly weak inflation continues to surprise Federal Reserve policymakers. In a speech last Thursday, New York Fed President William Dudley did not repeat an assertion from three weeks ago that he expects to raise rates once more this year.
Today, Oil prices jumped after the Saudi Oil Minister discussed possibly extending a pact to cut global Oil supplies beyond March 2018 with his Venezuelan and Kazakh counterparts. News of the talks on Sunday helped offset downward pressure on Oil prices amid worries that energy demand would be hit hard by Hurricane Irma and its aftermath. The hurricane knocked out power to nearly 4 million homes and businesses in Florida on Sunday. It is forecast to weaken to a tropical storm over northern Florida later today.
Meanwhile, the British Pound strengthened and hit a five-week high of $1.3224 against the US Dollar, as investors covered short positions and UK manufacturing data beat outlooks in July and rose for the first time this year. Moreover, the Sterling’s gains against the Dollar are coming amid speculation over the Federal Reserve plans and tensions with North Korea that are weakening the US currency.