Oil Price Surge Sends Global Yields to Record Highs
Major currencies remained steady on Thursday as oil prices surged to another day above $100 a barrel, driven by energy disruptions in the Gulf. The price of refined fuels such as heating oil and natural gas also increased.
The European Central Bank is expected to raise interest rates for a second time since the war started in late February to tackle inflation concerns. However, global bond yields have risen to multi-decade highs, but this has not led to safe-haven flows into the dollar.
Richard Franulovich, head of FX strategy at Westpac Institutional Bank, noted that markets are becoming less sensitive to oil shocks as the war drags on. He added that debasement trades, global central bank tightening, and a more interventionist Treasury Department have all contributed to the dollar's weakness.
The euro traded near two-week highs ahead of the ECB decision, reaching $1.1639. The yen also gained, with the currency trading at 153.525, near seven-month highs, as traders await an expected hike by the Bank of Japan next week and U.S. inflation data on Thursday and Friday.