The dollar hit a two-month high against a basket of currencies on Wednesday on expectations the Federal Reserve will raise rates in the near term, but it gave up gains against the euro on relief that there was progress in Greek bailout talks.
Euro zone finance ministers early on Wednesday gave a nod to releasing 10.3 billion euros in new funds for Greece in recognition of painful fiscal reforms pushed through by Prime Minister Alexis Tsipras´s leftist-led coalitionThe dollar index was flat at 95.536, after rising as high as 95.661 earlier in the Asian session, its highest since late March.
Federal Reserve Bank of Philadelphia President Patrick Harker said that he could see two to three rate hikes in 2016 and that prices will return towards the central bank’s inflation target over the medium term.
Harker later told reporters that “if the data comes in and it’s not that consistent with my view of the strength in the economy, then I would pause, but otherwise, I think a June rate increase is appropriate.” The policy-setting Federal Open Market Committee next meets June 14-15 in Washington.
Dallas Federal Reserve Bank President Robert Kaplan on Wednesday said he would support raising interest rates in the “near future,” though a vote by Britain on whether to leave the European Union will weigh on any Fed rate decision in June.
Oil prices rose as much as 1 percent on Wednesday after the U.S. government reported a larger-than-expected drop in crude stocks for last week, but profit-taking after the data kept prices below the $50 a barrel level that oil bulls had been hoping for.
The U.S. Energy Information Administration said crude inventories fell 4.2 million barrels in the week to May 20. While the decline was steeper than the 2.5 million barrels forecast by analysts in a Reuters poll, it was not as much as the 5.1 million expected by trade group American Petroleum Institute.
Brent LCOc1 was up 60 cents, or 1.3 percent, at $49.21 a barrel by 11:03 a.m. EDT (1503 GMT) and WTI CLc1 rose 40 cents, or 0.9 percent, to $49.02.
However, global benchmark Brent futures LCOc1 rose to as high as $49.96 per barrel, the highest level since early November, and last stood at $49.78.
U.S. West Texas Intermediate (WTI) CLc1 hit $49.75, a seven-month high.
Reference: Bloomberg, Euronews, Reuters
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