Black Friday Sale! Save huge on InvestingProGet up to 60% off

FOREX-Steadier oil helps Aussie, kiwi after Fed statement

Published 28/01/2016, 08:08 pm
© Reuters.  FOREX-Steadier oil helps Aussie, kiwi after Fed statement
EUR/USD
-
USD/JPY
-
AUD/USD
-
NZD/USD
-

(New throughout after start of European trade)

* Aussie up almost 0.8 pct as oil tops $33

* Fed keeps rates unchanged, offers cautious outlook

* BOJ in focus, market see almost 50 pct chance of easing

* RBNZ opens door to rate cut, hampers kiwi gains

By Patrick Graham

LONDON, Jan 28 (Reuters) - Commodity-linked major currencies including the Australian and New Zealand dollars surged on Thursday as oil traded back above $33 a barrel, its highest levels in almost three weeks.

A mixed performance for other majors after Wednesday's Federal Reserve statement saw the dollar trade flat against the euro EUR= and marginally higher against the yen JPY= while losing around a quarter of a percent to sterling. GBP=

The yen also got a brief boost from the resignation of Japan's Economy Minister Akira Amari following a row over allegations he received bribes from a construction company. Aussie gained almost 0.8 percent to $0.7081 in early trade in Europe, nearing three-week highs hit a day earlier.

The New Zealand dollar was just under half a percent higher, held back by signals from its central bank that further easing of interest rates may be required in the face of a poorer global economic outlook.

"The kiwi clearly underperformed after the Reserve Bank meeting overnight," said Richard Benson, co-head of portfolio management at currency fund Millennium in London.

"Stocks did end down in the U.S. but there are other more bullish signals. Oil is back above $33, the U.S. 10-year yield is above 2 percent. The Aussie and New Zealand dollars have held up well."

A renewed slide in oil prices, together with concerns over China, has been at the heart of a deepening global sell-off on stock markets since the first week of January.

That had knocked the Aussie back by as much as 6 percent since the start of January but it has halved those losses in the past 10 days.

With the Fed out of the way, the focus moves on to the Bank of Japan, which started its two-day policy meeting on Thursday with traders saying markets were factoring in up to a 50 percent chance of more measures to ease monetary policy.

"It is a tricky situation. If they don't ease, the yen will strengthen and stocks will fall. But even if it does something, the impact may (only) last a week or so," said Masatoshi Omata, senior client manager at Resona Bank.

"But after that, markets could start to worry whether its monetary stimulus is really working."

The yen traded 0.1 percent lower against the dollar at 118.28. The euro was broadly flat at $1.0898.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.