Commodity currencies soften on low oil prices as participants look ahead to the FOMC
Commodity linked currencies are the notable movers today with WTI and Brent crude prices remaining under pressure and spending much of the day in negative territory. As a consequence, softness has been seen in the likes of CAD, RUB and NOK, with the latter likely to see some attention tomorrow, with the Norges Bank rate decision scheduled for release during the European morning. Separately, AUD has strengthened against major counterparts in tandem with US participants arriving at their desk, in line with a move higher seen in spot gold, which ends the European session significantly higher.
Away from commodity currencies, price action has been relatively choppy, with market focus particularly USD driven and participants uncertain ahead of the rate decision. Despite some strength in the USD earlier in European hours, this was pared throughout the day as participants remain uncertain of what to expect from the FOMC rate decision. While a Fed rate hike is considered to be mostly priced in, a lot of attention will be given to any rhetoric regarding the rate path, while a chance remains that the Fed could back away from their recent rhetoric and choose either not to hike, or to do a smaller than expected hike.
Looking ahead to tomorrow, much of the price action may still be impacted by the upcoming Fed decision, while other highlights include the aforementioned Norges Bank rate decision, German IFO release, UK retail sales and US Philadelphia Fed business outlook and weekly jobs numbers.