Commodity currencies take advantage of the reprieve in energy prices to regain some of their recent losses against the USD
In a continuation of the trend seen so far this week, today saw a light calendar in terms of data releases and as such much of the price action saw continued focus on commodities. After Friday’s decision by OPEC to not lower their current level of output, the energy complex and namely WTI and Brent have seen significant softness and reached multi year lows. However price action today has seen some profit taking on the recent moves, with both aforementioned commodities as well as the precious metals complex spending the session in the green. The energy complex saw a significant bout of strength in the wake of the latest DoE crude oil inventories (drawdown of 3568K vs. Exp. build of 1300K), with the strength seen in energy futures filtering through to the commodity complex and the likes of CAD, NOK and RUB all benefiting today.
Separately, the risk off sentiment in equity markets have seen weakness go through the USD, with JPY benefiting from safe haven flows, while the likes of EUR and GBP also saw significant gains. Also of note, overnight the CNH/CNY spread continued to widen as markets reacted to some of the recent downbeat data, while today also saw sources suggesting that the PBoC is to suspend their new quota on applications for RQDII offshore yuan investment programme, which could have the effect of halting capital outflows.
Looking ahead, today sees the RBNZ rate decision, with NZD spending the day relatively rangebound ahead of the release. Tomorrow, participants can look forward to Australian unemployment rate, the SNB and BoE rate decision as well as weekly US jobs data and a host of ECB speakers.