The Canadian dollar held at two-week highs on Thursday, having benefited hugely from a jump in oil prices, while an absence of fresh cues in minutes of the Federal Reserve's January meeting saw the greenback shuffle sideways. Investors warmed to the Canadian currency after oil prices surged after Iran voiced support for a Russia-Saudi-led move to freeze production.
Although Iran gave no commitment it would curb its own output to deal with a market glut, signs of cooperation between rival producers helped to boost battered oil prices, with Brent crude futures rising to around $35 per barrel from this week's low below $32. That helped to boost the loonie to C$1.3655 per the US dollar, a high last seen on February 4. It last stood at C$1.3657.
Some other commodity currencies took heart from the loonie's performance. The New Zealand dollar popped back above 66 cents, pulling well away from a two-week trough of $0.6545 touched on Tuesday. The Malaysian dollar also rose 1.4 percent. The Australian dollar, however, fell 0.4 percent to $0.7158 after the local employment data showed an unexpected fall in payrolls and rise in the jobless rate.
The rebound in oil prices coupled with strong US industrial production data helped markets recover from recent jitters. European and US stocks ended higher, while most emerging market currencies also firmed. Mexico's peso outperformed after the central bank ambushed markets with an interest rate hike and intervened directly in the market to support the currency. In contrast, Venezuela devalued its bolivar and announced a new system for setting the exchange rate.
The dollar and euro remained in consolidation mode against their Japanese peer, having found a floor at multi-month lows last week. The greenback fetched 114.00 yen, while the euro bought 126.99 yen, holding above their troughs of 110.985 and 125.795 respectively. Making the rounds in the market early in Asia, the Nikkei Asian Review reported that Japanese Prime Minister Shinzo Abe has ruled out more spending stimulus for now. Still, traders are speculating that the Group of 20 countries may seek measures to boost growth at their finance chiefs' meeting later this month.
"It is unlikely that China will devalue the yuan sharply for now ahead of the G20. I think the market will likely be in a holding pattern until the G20," said a trader at a European bank. Minutes of the Fed's January 26-27 meeting underlined the central bank's unease over the global outlook. "The cautious tone from the January FOMC meeting minutes highlight that the downside risks to the US growth outlook had increased," said Elias Haddad, currency strategist at Commonwealth Bank.
"We still expect the Fed to resume raising rates in June, which will continue to bode well for the USD." The dollar was little moved against the euro, which stood at $1.1132. Just a week ago, the common currency scaled a 3-1/2 month peak of $1.1377. The dollar index was little changed at 96.804.
Comments
Comments are closed.