USD Gets OPEC Boost As Commodity Currencies Drop

The dollar strengthened on Friday after OPEC decided not to cut oil output, slamming commodity currencies like the Norwegian crown, which fell to five-year lows against the greenback and euro.

The euro slipped before data due at 1000 GMT, which is expected to show euro zone prices rose just 0.3 percent in November. That is deep in the European Central Bank’s “danger zone” for inflation of below 1 percent and even further away from its target of just under 2 percent.

Investors took aim at currencies of oil-rich countries such as Norway and Canada as Brent crude tumbled to a four-year low of $71.25 after OPEC’s decision. Crude is down more than 10 percent this week alone.

The U.S. dollar rallied to 6.9963 Norwegian crowns, a high not seen in over five years, up 0.9 percent on the day. The euro also hit a five-year high of 8.7080 crowns.

Against the Canadian dollar, the greenback rose 0.4 percent to a two-week high of C$1.1384.

“If oil prices remain where they are or decline further, the need to buy these currencies will be less because their exports have become markedly cheaper,” said Hamish Pepper, currency strategist at Barclays in London.

“There’s a very direct channel through which these currencies are impacted.” The dollar rose 0.7 percent against a basket of major currencies to 88.217, leaving it on track to finish November with five straight months of losses – its best run in five years.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.