The dollar sign is seen alongside the signs for other currencies above a currency exchange shop at Mongkok shopping district in Hong Kong, China.
LONDON: The US dollar fell from a seven-month peak yesterday, combining with signs of an easing supply glut to help lift oil prices back towards a one-year high.
A weaker dollar boosts crude prices, which gained over 1 percent to top $52 a barrel, since it makes fuel cheaper for countries using other currencies.
The bounce in oil pushed a key market gauge of long-term euro zone inflation expectations to a multi-month high, keeping bond yields elevated above record lows seen in the wake of Britain’s vote in June to leave the European Union.
Wall Street was set to open a touch higher but neither the rise in commodity prices nor a barrage of data confirming China’s economy, the world’s second largest, was stabilising could prevent a dip in euro zone stocks after a series of poor earnings results.
“Oil is a good indicator of expectations for growth next year,” said Frederik Ducrozet, a senior European economist at Swiss wealth manager Pictet. “It is comforting for markets that oil is above $50 a barrel and looking stable at those levels.”
Against a basket of major currencies, the US dollar fell 0.2 percent to 97.665, off Monday’s seven-month high of 98.169, after consumer price data showed underlying inflation had moderated. That prompted markets to trim bets on a Federal Reserve rate hike later this year.
Traders said that had helped lift oil, which was also supported by a report of a drop in US inventories and declining production in China. An upbeat OPEC statement on its planned output cut also supported the market. International Brent crude futures were at $52.35 a barrel at 1040GMT, up 67 cents, or 1.3 percent, and heading back towards a one-year high of $53.73 seen earlier this month. US West Texas Intermediate (WTI) crude oil futures were trading at $50.96 per barrel, also up 1.3 percent, having been below $40 a barrel at the start of August.
European shares fell early yesterday after a slew of weak updates weighed on British companies Travis Perkins and Reckitt Benckiser. Akzo Nobel’s results were hit by a weak pound. The pan-European STOXX 600 index edged down 0.1 percent, following a 1.5 percent rise in the previous session. Earlier, Asian shares edged up for the second straight day after data showing Chinese gross domestic product expanded 6.7 percent in the year to September, exactly as forecast.
Other data showed retail sales rising 10.7 percent and urban investment 8.2 percent. Industrial output disappointed by growing only 6.1 percent.
