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FOREX-Oil-linked currencies' sell-off intensifies

Published 09/12/2015, 02:39 am
Updated 09/12/2015, 02:40 am
© Reuters.  FOREX-Oil-linked currencies' sell-off intensifies
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* Dollar hits decade-plus highs against loonie, Norwegian crown

* Worries about China pressure export-oriented currencies

* Oil posts fresh near 7-year lows after Monday's 6 percent drop (Updates to U.S. trading; changes byline, dateline; previous London)

By Richard Leong

NEW YORK, Dec 8 (Reuters) - The Canadian dollar, Norwegian crown and currencies of other major oil exporters fell on Tuesday, hitting decade-plus lows versus the dollar as concerns about an oil supply glut and soft global demand sent crude prices to near seven-year lows.

Growth-oriented currencies such as the Australian dollar also remained on the defensive after Chinese trade data for November did little to soothe concerns about China's economic slowdown.

Falling oil and weak metal prices underpinned bets central banks of export-reliant economies would embark on more stimulus to weaken their currencies in a bid help exporters.

"It's a perfect storm for commodity currencies," said Mazen Issa, senior currency strategist at TD Securities in New York.

He added high expectations the Federal Reserve would raise U.S. interest rates for the first time in nine years have been the other key factor that has hurt commodity-linked currencies.

Fed policy-makers meet next Tuesday and Wednesday.

The dollar, while stronger against commodity currencies, retreated against the euro and the yen. The weak outlook on oil, metal and other key exports has hurt stock prices worldwide, reducing the greenback's allure against these major currencies.

The euro gained 0.4 percent at $1.0878 EUR= , while the dollar fell 0.5 percent at 122.77 yen JPY= .

The dollar against a group of major currencies was down 0.2 percent at 98.437 .DXY .

On the flip side, the dollar touched C$1.3623, its strongest against its Canadian counterpart since mid-2004. It rose 1.5 percent versus the Norwegian crown, touching 8.8194 crowns, its highest since April 2002.

"With oil prices falling and some even talking about oil falling to $30 a barrel, revenues for these countries will take a beating and hence their currencies will remain under pressure," said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.

U.S. crude prices fell to their lowest since early 2009, last down 0.4 percent at $37.51 a barrel CLc1 . Brent futures LCOc1 in London fell as low as $39.81 to their lowest since February 2009. On Monday, they had tumbled 6 percent and touched their lowest since February 2009.

The Australian dollar fell 0.8 percent to $0.7209 as this week's tumble in iron ore prices and the latest Chinese data weighed on the currency's woes.

On Tuesday, spot iron ore fell to a decade low below $40 a tonne, bringing the year-to-date drop to 45 percent.

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