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Russian Ruble, Canadian Dollar Rebound As Oil Prices Rise

Kuwaiti strike offsets oil producers' failure to agree on output freeze, analysts say

Commodity-linked currencies rebounded sharply in intraday trading Monday, reversing a widespread slump from earlier in the session as oil prices recovered.

The ruble traded at 66.33 to the dollar late Monday, compared with 66.44 late Friday in New York. The greenback traded at C$1.2808 Monday, compared with C$1.2824 Friday. The Aussie dollar traded at 77.44 U.S. cents, compared with 77.24 cents Friday.

Analysts largely blamed the currency-market moves -- as well as a late-day recovery in U.S. stocks (http:// -- on oil.

"Oil continues to be the driver here. This has been the case for the better part of the last couple of weeks when oil ran up to its highs for the year," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

After tumbling more than 5%, oil prices trimmed their declines as a strike in Kuwait offset worries (http:// key producers' failure to reach an agreement on an output freeze ( as-saudis-insist-that-iran-participate-2016-04-17) during a widely watched weekend meeting.

Read:No oil deal in Doha? No incentive for Saudis to let up ( incentive-for-saudis-to-let-up-2016-04-17)

The dollar suffered earlier in the session as falling oil prices drove a flight to safety that benefited the yen, analysts said.

The oil-price drop also hurt the dollar by fueling speculation that it might cause the Federal Reserve to wait longer before raising interest rates again, said Simon Derrick, chief currency strategist at BNY Mellon.

Higher interest rates typically make a currency more appealing to investors by increasing returns on assets priced in it.

"There's an argument that if you were to see renewed weakness in the oil price then perhaps the Fed will be more conservative and cautious about hiking rates," Derrick said.

Earlier this year, the Federal Reserve identified the drop in oil prices as one of the biggest potentially destabilizing risks for the global economy, along with the economic slowdown in China.

Derrick said some of the buck's early weakness could also be attributed to a perceived disagreement between the U.S. and Japan as members of 20 major economies, a group known as the G-20, met over the weekend.

The U.S. dollar traded at Yen108.77 late Monday, compared with Yen108.78 late Friday in New York. The euro remained slightly higher against its U.S. rival, trading at $1.1311, compared with $1.1282 Friday.

Brazil's currency slides

In other currency trading, the Brazilian real tumbled even after the country's lower house of Congress voted over the weekend to impeach President Dilma Rousseff ( backs-rousseff-impeachment-2016-04-18).

Read: Why bad news for Dilma Rousseff isn't lifting Brazilian stocks ( for-dilma-rousseff-isnt-lifting-brazilian-stocks-2016-04-18)

The real's move surprised strategists, who had expected Brazilian assets and its currency to rally on the news. Instead, it drove speculation that the outcome had already been largely priced in.

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