Commodity currencies suffered a perfect storm of low
oil prices to $is not a good thing?
FX168 - financial markets focus on crude oil.In the past three days, the volume of the world's biggestcommoditiesTumbled more than 12% to the lowest level in seven years.The commodities across the setback, and includedThe Canadian dollarAnd the Norwegian krone commodity exporters such as currency in the days of "painful", or in the short term will remain under pressure.Although commodity currencies under pressure recently, since this weekThe dollarIndex is nearly equal, after all why?Analyst for the logic behind are analyzed.
On Tuesday and commodity index fell to its lowest level since 1999, brent oil prices dropped below $40 / barrel for the first time since 2009.
Norwegian krone led by commodity currency, against the dollarThe exchange rateFell to their lowest level since April 2002, the Canadian dollar will fall to 11-year lows.Oil prices tumbled and metal prices weak, support for export-dependent economies central Banks will offer a more stimulus measures, expected to suppress their currencies to help exporters.
The United StatesCrude oilfuturesFell to their lowest level in early 2009 to, at hk $37.51 a barrel on Tuesday, fell $0.14.Brent crude oil futures fell to their lowest level in February 2009 to $39.81, both contracts are collapse 6% on Monday, and in February 2009 to a minimum.
OPEC meeting in December 4, gave up its production targets, 30 million barrels per day to support the current production levels of about 31.5 million barrels a day.
The U.S. governmentdataShow that by the end of the week on December 1, a fund manager of WTI bearish level is the highest for five years.
Td securities, senior currency strategist Mazen Issa said: "for commodity currencies, this is a perfect storm."Related articles please click on the regression of commodity currency: oil is "blame"
The organisation of the petroleum exporting countries (OPEC) failed to agree on yield limit Friday, means that the excess supply will continue to suppress prices.The decision for investors to sell crude oil, as well as the Canadian and Norwegian krone oil exporters such as currency on a green light.
Dollar/Norwegian krone surged 1.5% to 8.8194, in April 2002 to the highest.U.S. dollar/Canadian dollar late rose 0.6% to 1.3585, touching its lowest level since June 1.3622 in 2004.
Commodity prices fell by 24% so far this year, the biggest drop since 2008.
Due to the iron ore prices this week and the latest data on ChinaThe Australian dollarThe aud/usd fell 0.85% to 0.7203 in late New York Tuesday.
CIBC World Markets foreign exchange strategy at Jeremy Stretch said: "if you want to bet on oil price weakness, you'd think it would sell a Canadian and Norwegian kroner, the drop in oil prices, some people even say that oil prices will fall to $30 a barrel, the income in these countries will suffer, so these countries' currencies will remain under pressure."
Mizuho Bank, Mizuho Bank, Ltd.) in New York foreign exchange traders Keisuke Mr Hino says, "and in dollarsThe Japanese yeninThe federal reserveBefore the meeting in a range, the price of crude oil may determine the course of the exchange rate.In this environment, along with the market focus on oil prices also fell very, may be able to bet on a commodity currency will fall further."
Commonwealth bank of Australia (CBA) chief currency and rates strategist Richard Grace said: "the decline in oil prices will not end soon. Expect oil prices, bond yields, and commodity currencies will further pressure, no important American before Friday's retail sales data, so the commodity prices will lead this week's deal."
Low oil prices to $is not a good thing?
But on the whole, the dollar on Tuesday have different performance, against the Japanese yen andThe Swiss francSuch as safe-haven currencies slide.The dollar index fell 0.2%, to 98.45.And so far this week, the dollar index is almost flat.
Analysts pointed out that, as a result of lower oil prices could exacerbate global deflation fears, contributing to global down also makes the high market risk aversion, this makes the yen and other safe-haven currencies and low yieldsThe euroDo a good job.
The dollar/Swiss franc plunged 0.75% in late Tuesday in New York, the dollar/yen fell 0.3%, the euro/dollar rose 0.5%, at 1.0887.
Affected by the commodities have fallen sharply, industrial and mining stocks lead the global stock market fell.On Tuesday the MSCI all country world index fell 0.9%, down 3.7% so far this year.
The MSCI Asia Pacific index fell 1.2%.Energy the MSCI Asia Pacific index fell 3.9%, hit the lowest level since October 1.Tokyo stock exchange stock index fell 1%.AustraliaThe s&p/ASX 200 index fell 0.9%.The Shanghai composite index fell 1.9%.
Mining companies stocks led the stoxx Europe 600 index fell 1.6%.U.S. stocksThe s&p 500The index fell 0.6%.CanadaThe s&p/TSX composite index fell 0.9%, the index closed at a two-year low.
BK Asset Management chief analyst Kathy Lien, crude oil decline usually agree with the strong dollar performance, but in the past several days did not present the dollar rising momentum.Although the dollar against the commodity currencies, but performance struggle against the euro and the yen.
The article points out that for a long time, many economists argue that low oil prices for the American economy is a good thing, because it can boost consumption, but even if gasoline prices fell by an average of 25% since the summer, there was no surge in U.S. consumer spending.November retail sales are expected to be improved, but only slightly increased by 0.1%, and for most retailers, past "black Friday" is undoubtedly a disappointed.Recent data show that americans are saving more or excess cash used to pay off debt.Therefore, if the decline in oil prices could push consumer spending, but commodity prices of the most important benefits cannot be taken into consideration, so investors have to focus on other influences.
Kathy Lien, wrote: "we believe that, unless a low oil price is not driven by the rapid rise of the dollar (of course now is not the case, otherwise the weak oil prices the impact of the dollar will do greatgood.Opposed to DecemberIncreases in interest ratesIs one of the biggest basis, U.S. inflation is low, and plunged 12% in the price over the past three sessions will only make the fed inflation has become increasingly difficult."
Lien still expect the fed will raise interest rates next week, but she claims when there may be many dissidents.Oil prices fell, meanwhile, will make the fed policymakers more urgent to weaken the influence of raising interest rates for the first time, with dove forward direct to implement.Of course, the United States is not the only country affected by low oil prices.Unless the oil price trend reversal and back above $50 a barrel, 2016 global inflation still will be reined in.
Kathy Lien, points out that low oil prices for oil prices is another reason for the bad news is, if consumer spending failed to increase, the price will be the main effects of the downturn energy decline in corporate profits more layoffs and oil industry.From today, the U.S. labor market and the economy as a whole will suffer negative effects, which could force the federal reserve more cautious when launch hike next time.