The U.S. dollar reached another record low against the euro currency Wednesday while oil rose to its highest level since the beginning of the Iraq war.
Oil gained another 46 cents to just under $34 a barrel. This is its highest level since just before the U.S. led invasion of Iraq in March. Prices rose in New York in large part because U.S. oil inventories fell more than expected because of severe winter weather in the heavily populated northeast.
Oil has now risen by more than five dollars a barrel, or 20 percent, since OPEC agreed in September to cut supply by three percent. Oil is now priced above the upper limit of the OPEC price target range of $22 to $28 a barrel.
The euro continues its relentless rise, gaining nearly one U.S. cent to above $1.24. This is the 12th daily record high for the euro in the last 14 trading sessions. The euro is the single currency used by 12 European Union nations.
The euro gained strength after the chief economist of the European Central Bank, Otmar Issinger, seemed to shrug off the dangers of the currency's sharp raise, saying the euro was back more or less to where it started in 1999. The euro has gained nearly 20 percent against the dollar this year.
Despite the dollar's decline, price pressures in the United States remain restrained. That may be because the dollar has held steady against the Chinese currency while it has declined steadily against the euro. China has a huge trade surplus with the United States and much of its rapid economic growth is linked to exports to the U.S. market.