Oil prices rebounded yesterday from 2009 levels after US oil futures hit a fresh intra-day low $34.52 a barrel. US futures were slightly below earlier highs at $36.08 in today’s Asian session, while Brent crude was trading at $37.82 a barrel. Oil prices are expected to remain under pressure as a mild winter is likely to hit demand further in the coming months.
The Australian dollar received a boost from the RBA’s latest meeting minutes, which said that low interest rates and household spending should continue to support growth. The aussie peaked at 0.7282 against the dollars soon after the minutes but retreated to 0.7260 dollars by late Asian session. Some traders still expect the RBA to ease further in 2016 if the inflation outlook worsens and this may keep some pressure on the aussie in the near term.
Meanwhile, the People’s Bank of China set a lower midpoint for the yuan for the seventh straight day. The yuan was fixed at a new 4-year low of 6.4559 against the dollar. Capital outflows and economic slowdown continue to put pressure on China’s central bank to gradually weaken the currency.
The US dollar was weaker on Tuesday as risk sentiment remains subdued ahead of the start of the FOMC meeting later today. The Fed is expected to announce its first rate hike in almost 10 years on Wednesday at the end of its two-day meeting.
The greenback was back below 121 yen in late Asian session and was trading at 120.61 yen. The euro benefited from risk aversion and climbed to 1½-month highs of 1.1051 dollars. Sterling was weaker at 1.5143 dollars, while the rebound in oil prices helped the Canadian dollar come off 11-year lows. The US dollar was slightly down at 1.3710 against the loonie in late Asian trading.
Looking ahead to the rest of the day, US and UK inflation figures will likely bring focus on the dollar and the pound. The ZEW business confidence survey for Germany will also be closely watched and the latest dairy auction could impact the New Zealand dollar.