The Canadian dollar hit its highest level in two weeks and the Australian dollar a 10-day high on Monday as a bounce in oil prices drove a recovery in major commodity-linked currencies.
The Canadian dollar hit its highest level in two weeks and the Australian dollar a 10-day high on Monday as a bounce in oil prices drove a recovery in major commodity-linked currencies. Saudi Arabia and Russia agreed on Monday to extend oil output cuts until March 2018 to rein in a global crude glut, pushing up prices by as much as 2 percent and dominating early trade on European currency markets.
That gave the Canadian dollar a 0.6 percent lift, hitting its highest level since April 28, at C$1.3629 per dollar. The Canadian dollar hit its highest level in two weeks and the Australian dollar a 10-day high on Monday as a bounce in oil prices drove a recovery in major commodity-linked currencies., while the New Zealand dollar rose 0.6 percent to $0.6895.
Weekly positioning data also showed speculators are net long Australian dollars, which helped it move away from last week’s four-month lows. “They (commodities currencies) are being boosted as commodity prices are boosted, oil in particular helping the Canadian dollar,” Alvin Tan, currency strategist with Societe Generale in London, said.
“It’s a combination of strong commodities and a weak dollar,” he said. The dollar started the week on the defensive after U.S. economic data came in shy of expectations and a weekend missile test by North Korea underpinned the safe-haven yen.
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The dollar index, which tracks the greenback against a basket of six major currencies, was 0.2 percent lower on the day at 99.0847. But after slipping versus the yen in Asian trade, the dollar recovered ground to trade 0.3 percent higher at 113.73 yen.
U.S. data on Friday showed a smaller-than-expected 0.4 percent increase in April retail sales from March, while a disappointing consumer prices report raised concerns for the retail sector and the broader economy. “The data was weaker than expected, but not weak enough to keep the dollar under pressure for long,” Mitsuo Imaizumi, Tokyo-based chief foreign-exchange strategist at Daiwa Securities, said.
“The North Korean missile news over the weekend gave the yen some lift, but not much,” he said. “Overall, we see the dollar trading in its recent ranges for the time being, with investors focused on next month’s Federal Open Market Committee meeting.” The Federal Reserve is widely expected to raise interest rates at that meeting and has forecast two more hikes this year following its a quarter point increase in March.
The euro marked its first net long positioning since early May 2014 in the week up to last Tuesday, as investors breathed a collective sigh of relief following pro-European Emmanuel Macron’s victory over anti-EU candidate Marine Le Pen in the second round of France’s presidential election on May 7. The euro was last up 0.1 percent to $1.0924.