The euro fell further on Friday and hit a low for over a year. The European common currency fell to $ 1.1434, its lowest since mid-2020. The euro is suffering from the divergence of monetary policies in the United States and in the euro zone. As the US Federal Reserve cuts its huge purchases of securities and high inflation fuels expectations of higher interest rates, the European Central Bank (ECB) remains on its loose course. The Fed’s less generous monetary policy strengthens the dollar and puts pressure on the euro.
Faced with growing fantasies about interest rates in financial markets, ECB leaders are trying to moderate expectations of a rapid tightening of monetary policy. Lithuanian board member Gediminas Simkus stressed on Friday that the inflation rate is expected to fall below the ECB’s 2% target in 2023, which means that the conditions set by the ECB for a rate hike interest should not be met. His Finnish colleague Olli Rehn also said the central bank would maintain its “patient and cautious” course of action despite rising inflation. The inflation rate in the euro area was 4.1% in October.
Oil prices fell on Friday. The price per barrel (159 liters) of the North Sea variety Brent fell just under one percent to $ 82.06. This week, oil prices have not found a clear direction. Little has changed in the basic situation: a cyclical increase in demand is offset by a scarce supply. Due to excess demand and the corresponding high prices, there is speculation in the oil market that large consuming countries such as the United States may release some of their strategic oil reserves.