Commodity Currencies Rising After Oil Rebound

Commodity currencies like the Australian and New Zealand dollars soared to 10-month highs against the U.S. dollar, drawing support from oil prices which stabilized from a slide and underpinned broad risk sentiment in global markets.

The Australian dollar AUD=D4 rose to $0.7803, its highest since last June and up 0.6 percent on the day. Similarly, the New Zealand dollar NZD= jumped 1 percent to $0.7028, its highest in 10 months.

The oil-linked Canadian dollar CAD=D4 hit its highest since July last year as crude bounced from lows touched on Monday, having come under pressure after major oil-producing countries failed to agree on an output freeze on Sunday.

Brent futures LCOc1 were higher at $43.75 a barrel, holding well above Monday’s low of $40.10. Oil prices had edged higher earlier on Tuesday, supported by a Kuwaiti oil industry strike that has led to a cut in the country’s oil production.

“It is quite amazing how oil prices have recovered from Monday’s lows. That is shoring up risk appetite and pushing up commodity-linked currencies,” said Niels Christensen, FX strategist at Nordea. “As long as oil remains above $43 a barrel we think commodity currencies will remain supported.”

via Commodity currencies like the Australian and New Zealand dollars soared to 10-month highs against the U.S. dollar, drawing support from oil prices which stabilized from a slide and underpinned broad risk sentiment in global markets.

The Australian dollar AUD=D4 rose to $0.7803, its highest since last June and up 0.6 percent on the day. Similarly, the New Zealand dollar NZD= jumped 1 percent to $0.7028, its highest in 10 months.

The oil-linked Canadian dollar CAD=D4 hit its highest since July last year as crude bounced from lows touched on Monday, having come under pressure after major oil-producing countries failed to agree on an output freeze on Sunday.

Brent futures LCOc1 were higher at $43.75 a barrel, holding well above Monday’s low of $40.10. Oil prices had edged higher earlier on Tuesday, supported by a Kuwaiti oil industry strike that has led to a cut in the country’s oil production.

“It is quite amazing how oil prices have recovered from Monday’s lows. That is shoring up risk appetite and pushing up commodity-linked currencies,” said Niels Christensen, FX strategist at Nordea. “As long as oil remains above $43 a barrel we think commodity currencies will remain supported.”

via Reuters

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