Lower Oil Prices, Ukraine Talks Boost Euro, Pound

The US dollar lost value to the euro and other major currencies on Tuesday after oil prices fell on indications of slower economic growth in China due to Covid-19 and ongoing talks to halt the Russia-Ukraine conflict.

The dollar index against major currencies fell nearly 0.4 percent to 98.735 but was still up nearly 3 percent since Russia began its campaign in Ukraine on February 24.

The euro and British pound each gained about 0.5 percent on the greenback, which also lost 0.2 percent against the Japanese yen.

Brent crude futures dropped as much as 8 percent after concerns over supply were eased by ongoing talks about a ceasefire in Ukraine and as rising Covid-19 cases in China suggested slower economic growth and less demand for oil.

The European economy and the euro are especially sensitive to the war and to the price of oil.

The drop in oil price “reflects the hope that the talks between the Russian and Ukrainian negotiators might lead to an imminent and peaceful solution after all", Commerzbank forex analysts said in a note to clients.

Earlier, major currency pairs had been relatively steady as markets waited to hear the tone on Wednesday of US Federal Reserve comments on the topic of interest rate policies in coming months.

Traders want to see if the Fed gives hints on how quickly it will raise rates again after putting through the quarter-point increase they expect to be announced on Wednesday. (Reuters)