🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

FOREX-Dollar falls, oil-exporter currencies rise after Saudi attacks; yen firms

Published 16/09/2019, 03:19 pm
© Reuters.  FOREX-Dollar falls, oil-exporter currencies rise after Saudi attacks; yen firms
USD/JPY
-
USD/CHF
-
USD/NOK
-
XAU/USD
-
USD/INR
-
GC
-
DXY
-
USD/CNH
-

* Attacks on Saudi oil facilities drive risk-off trade

* Dollar weakens as yen, oil-correlated currencies rise

* Fed, BoJ in focus later in the week

By Tom Westbrook

SINGAPORE, Sept 16 (Reuters) - The dollar fell while safe havens and currencies of oil-producing countries rallied on Monday, following an attack on Saudi Arabian refining facilities that disrupted global oil supply and heightened Middle East tensions.

Oil prices surged nearly a fifth at one point following the strikes on two plants, including the world's biggest petroleum processing facility in Abqaiq, which knocked out more than 5% of global oil supply. Iran-aligned Houthi group claimed responsibility for the damage, but the U.S. has pointed the finger directly at Iran. Canadian dollar CAD=D3 rose 0.4% to 1.3233 per dollar. The Norwegian krone NOK= rose 0.5% to 8.9363 per dollar. Both currencies often move together with the oil price because the countries are major oil exporters.

In India, a major importer of crude, the rupee INR= fell almost 0.7%.

"The natural flow through of higher (oil) prices has seen the NOK and the CAD outperform, and we'll probable see a better feel towards the (Russian) rouble later on," said Chris Weston, head of research at brokerage Pepperstone Group in Melbourne.

The attacks reversed last week's ebullient risk appetite and prompted U.S. President Donald Trump to tweet that the United States was "locked and loaded" for a response.

"We've got a beady eye on this and we're prepared to pile back in to the Japanese yen after last week's repositioning," Weston said, adding that while trade was calm, the strikes presented another geopolitical "what if" to vex markets.

The safe-haven Japanese yen and Swiss franc both firmed. The yen JPY=EBS rose 0.3% to 107.79 per dollar and the franc rose 0.4% CHF= to $0.9883. Gold XAU= jumped by 1%.

Against a basket of currencies .DXY the dollar edged lower to 98.162.

Beyond oil, currency markets are awaiting the outcome of central bank meetings in the U.S. and Japan this week and economic data in Australia and New Zealand that could determine the rates outlook in the Antipodes.

"Geopolitical risks and central bank rhetoric remain key drivers of risk this week," Australia and New Zealand Banking Group analysts said in a note.

On the Brexit front, British Prime Minister Boris Johnson's confidence of sealing a deal to leave the European Union by Oct. 31 applied renewed pressure to the pound. GBP=D3 fell 0.3 from a seven-week high to hit $1.2486.

While much of the risk appetite on display last week was driven by signs of a thaw in U.S.-China trade tensions, few fresh indications of progress left sentiment fragile.

Data released on Monday showed the slowdown in China's economy deepened in August, with industrial production growing at its weakest pace in 17-1/2 years and retail sales weaker than anticipated. added to pressure for stimulus and in offshore trade the Chinese yuan CNH= weakened 0.25% to 7.0631 per dollar.

In the United States, investors who had begun trimming expectations for a U.S. Federal Reserve rate cut on Wednesday are now certain rates will fall and divided only over how much. FEDWATCH

As for the Bank of Japan's policy decision on Thursday, a third of economists polled by Reuters expect stimulus to be ramped up. But sources say it may be a close call as policymakers wait till the last minute to assess market reaction to the Fed's decision hours earlier. markets are closed on Monday for a public holiday.

The euro EUR=D3 was steady at $1.1073.

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.