Strong Euro, Weak Dollar, Investors Choose Oil

The reason for euro hitting $1.60 for the first time ever was a warning from European Central Bank governing council members Christian Noyer and Yves Mersch that a possible interest rate rise saying policy makers will act if inflation does not slow. Since January 2002, when it was first issued as notes and coins, the single European currency has risen 80% against the dollar.

Policymakers around ECB President Jean-Claude Trichet have sounded increasingly hawkish. At its last meeting, earlier this month, the bank kept rates unchanged at 4%.

A weaker dollar means pricier oil and OPEC's Secretary General Abdullah al-Badri said it was the currency situation and speculative trading that have caused the price surge, not a shortage of supplies from the producer nations: "I can tell you that other players on the market are causing the price to be on this level. I can tell you that because of the value of the dollar against other currencies ... they go to oil, and not only to oil, they go to gold and other commodities."

Oil prices on both sides of the Atlantic continues to break records. On Tuesday, US light crude hit $119 a barrel and Brent was well over $116.