The euro strengthened versus the dollar amid speculation a recent drop that pushed it to a two-year low was overdone after Saudi Arabia Oil Minister Ali Al-Naimi said the oil market will recover.
A gauge of the greenback declined for the first time in four days, slipping from near the highest level in more than five years. The ruble advanced for a second day as Chinese ministers offered support to Russia with talk of expanding a currency swap between the two nations. The Australian dollar strengthened as Asian stock gains increased demand for higher-yielding assets.
“Something that could be an issue over the next few days is what the Saudis said,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp in London. The oil price could lead to “a higher euro. The ruble is the wild card, you don’t know how that’s going to play out over the next few weeks and you don’t know exactly how much oil prices could fall,” he said.
The euro rose 0.3 percent to $1.2260 as of 8:24 a.m. New York time after sliding to $1.2220, matching the weakest level since August 2012. The 18-member currency advanced 0.6 percent to 147.07 yen. The dollar gained 0.4 percent to 119.96 yen.
Al-Naimi said at a conference in Abu Dhabi at the weekend that fossil fuel will remain the main source of energy for decades to come. The Organization of Petroleum Exporting Countries last month refrained from reducing its production target of 30 million barrels a day.
The price of Brent crude traded at $61.15 a barrel in London after touching $58.50 on Dec. 16, the least since May 2009.
The ruble appreciated 7.8 percent to 54.9518 per dollar after reaching 80.10 on Dec. 16, the weakest level on record. Down 40 percent, it is the worst performer of 31 currencies against the greenback this year.
China will provide help if needed and is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying in Bangkok in a Dec. 20 report by Hong Kong-based Phoenix TV. Commerce Minister Gao Hucheng said widening a currency swap and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia, according to the broadcaster.
The dollar has gained 12 percent this year, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen weakened 3.1 percent and the euro fell 1.3 percent.
The greenback fell earlier today amid speculation its recent rally has been too rapid.
“The whole world expects the U.S. dollar to pick up, but I think most people have decided to take everything off the table and it’ll be next year’s story now — which is two weeks away,” said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. “I certainly wouldn’t put anything into day-to-day moves on the 22nd of December.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, traded at 1,125.33 after ending last week at 1,125.58, the highest closing level since March 2009.
Hedge funds and other large speculators last week reduced bets on dollar strength versus eight of its major peers by the most in nine months, according to data from the Commodity Futures Trading Commission in Washington. The difference in the number of wagers on gains compared with those on declines was 335,131 on Dec. 16 after investors amassed a record 428,558 dollar-long contracts at the start of the month.
“Investors for the third consecutive week reduced their aggregate USD exposure,” Danske Bank A/S analyst Kristoffer Lomholt wrote in an e-mailed note. “While we still think USD fundamentally looks attractive –- even after the recent appreciation — we emphasize that the USD is highly vulnerable to temporary corrections lower before year-end,”
The Aussie gained 0.1 percent to 81.38 U.S. cents after falling to 81.07 cents on Dec. 17, the least since June 2010. The MSCI Asia Pacific Index (MXAP) of shares rose for a third day, jumping 0.8 percent.