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FOREX-Commodity currencies inspired by oil price jump, yen in retreat

Published 13/04/2016, 09:37 am
© Reuters.  FOREX-Commodity currencies inspired by oil price jump, yen in retreat
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* Canadian dollar hits nine-month highs, Aussie near 2016 peak

* Oil prices extend gains on production freeze hope

* China trade data next in focus

By Ian Chua

SYDNEY, April 13 (Reuters) - The Canadian dollar hovered just under a nine-month peak early on Wednesday, having rallied along with other commodity currencies on the back of solid gains in oil prices.

With hopes of a production freeze among top producers Russia and Saudi Arabia back in play, global oil prices climbed to four-month highs overnight. in turn helped underpin risk appetite, which saw the safe-haven yen recoil from recent highs against the greenback and euro.

Canada's loonie stood at C$1.2769 per USD CAD=D4 , not far from the overnight high of C$1.2750 - a level last seen in July.

Also helping the currency, the Bank of Canada is widely expected to hold interest rates at 0.5 percent following its meeting on Wednesday. After a run of better-than-expected economic data at the start of the year, the central bank is also likely to raise its growth forecasts.

Other commodity currencies were firmer with the Australian dollar at $0.7681 AUD=D4 , nearing its 2016 peak of $0.7723 set a few weeks ago.

In contrast, the dollar, euro and yen were pretty subdued, albeit with the Japanese currency slightly weaker.

The greenback was back above 108.50 yen JPY= , having climbed from a near 18-month trough around 107.63 set on Monday. The euro rose to 123.60 yen EURJPY=R , putting further distance from a three-year low of 122.085 set last month.

Against the dollar, the euro eased to $1.1384 EUR= after turning around from a six-month peak of $1.1465. That helped the dollar index .DXY climb back above 94.000, from a near eight-month low of 93.627.

"Given that the market is quite short USD against the EUR and JPY, and with U.S. inflation data also likely to be on the firm side on Thursday, we expect the USD's corrective recovery against the core majors to extend a little further this week," analysts at BNP Paribas (PA:BNPP) wrote in a note to clients.

Whether risk sentiment will hold up could depend on China trade data due later in the day. Renewed worries about the strength of the world's second biggest economy might see the safe-haven yen bounce back. ECONCN

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