US Dollar strengthens as crude oil prices drop

The US dollar was stronger on Tuesday as investors bet that lower crude oil prices would help spur growth in the US economy. Crude oil prices were down to levels not seen since July 2005 and heating oil demand remained low amid continuing mild weather in much of the nation.

In mid-afternoon trade, the dollar was steady at NKr6.3440 versus the Norwegian krone and 0.1 percent higher to $1.2005 in relation to the euro, while it was up 0.3 percent to C$1.1790 against the Canadian dollar and had added 0.6 percent to ¥119.45 against the Japanese yen.

The yen, on the other hand, was weaker ahead of next week’s meeting of the Bank of Japan even though analysts were of the opinion that even if the Bank increases interest rates to 0.5 percent investors will still employ the yen as a funding currency.

The Japanese currency dropped 0.4 percent to ¥155.23 versus the euro, while it fell 0.5 percent to ¥93.19 against the Australian dollar and was 0.7 percent lower to ¥82.54 in relation to the New Zealand dollar.

Sterling added 0.1 percent versus the greenback to $1.9400, while it was 0.3 percent higher to £0.6699 in relation to the euro and gained 0.6 percent to ¥231.70 against the yen. Analysts said that while the Bank of England is likely to hold rates at current levels when it meets later this week, there is a good chance that it will hike rates at its February meeting.

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