The global markets saw many economic events that shaped the global economy. Oil supply disruptions, SNB keeps interest rates unchanged, Jerome Powell’s statements, and manufacturing sector data from the eurozone.
Fears of supply disruptions push oil prices up
Oil prices rose during the week’s trading as concerns rise over the disruption in oil supplies after a ship is stranded in the Suez Canal, one of the largest and most important shipping channels in the world.
WTI futures rose on Friday by 2.07% to $60 a barrel, while Brent crude rose by 1.8% to $63.00 a barrel.
The main reason for the rise in oil prices is that the unloading process of that ship could take weeks due to the size of the massive shipping vessel, and thus supplies could be disrupted even further.
Jerome Powell's testimony supports the US dollar
The US dollar benefited from the positive comments made by US Fed Chairman Jerome Powell on Tuesday and Wednesday. Powell emphasized that the worst period for the US economy is already over, and that the pace of recovery is likely to begin gradually. Despite the challenges still facing the economy, Powell stresses that the Fed will do all it can to stimulate an economic recovery.
It is also worth noting that the re-imposition of lockdowns by some European countries again to control the rise in infections in the third wave, was a major reason for the high demand for the US dollar compared to the rest of the major currencies.
Positive data in the euro area
The manufacturing sector data in the eurozone showed a remarkable recovery as data released by the Markit Statistics Office indicated, in conjunction with the continued contraction of the services sector.
PMI data showed an increase in the manufacturing sector from 57.9 to 62.4 points, and a rise in the services sector from 45.7 to 48.8 points.
Despite the improvements, the reinstated lockdowns in several countries in response to the third wave of the pandemic raised concerns over the entire region's economy in the coming period. This caused an increase in the sell transactions of the euro against most of the major currencies, especially against the US dollar – the EURUSD fell to 1.1770.