The euro has fallen below the 1.12 level as renewed tensions in the Middle East and elevated oil prices drive demand for the US dollar, according to Ebury’s latest G3 FX Update.
Middle East Tensions Impact Currency Markets
Concerns over developments in the Middle East are supporting oil prices and encouraging investors to seek the safety of the dollar. Matthew Ryan, Head of Market Strategy at Ebury, noted that the euro’s decline comes despite a retreat in French government bond yields. Political uncertainty in France continues to pose a risk for the euro, even as bond yields have fallen significantly from recent highs.
Focus on Federal Reserve Meeting Minutes
Attention is now on the Federal Reserve’s September meeting minutes, expected later today. Although the Fed’s latest projections suggested one more rate hike this year, Ebury believes that weaker-than-expected US inflation and employment data since the meeting make another hike unlikely. The market is currently pricing in a low probability of a rate hike in October.
About Ebury: Ebury is a financial services company specializing in international cash management solutions, offering services such as foreign exchange, trade finance, and business lending.
