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FOREX--Dollar struggles as rising oil prices lift commodity currencies

Published 18/05/2020, 10:37 pm
© Reuters.
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* Pound near seven-week low on Brexit worries, negative rates

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus

LONDON, May 18 (Reuters) - A jump in oil prices lifted commodity currencies such as the Norwegian crown and the Canadian dollar against the U.S. dollar on Monday as optimism about a reopening of economies stifled by the coronavirus pandemic boosted risk appetite.

The gradual easing of lockdowns has raised hope across global markets, despite fresh trade tensions between the United States and China, though traders were wary of taking big bets before more data this week.

"The surge in oil prices will also provide a selective opportunity to sell the U.S. dollar against oil-sensitive major currencies," wrote Stephen Innes, chief global markets strategist at AxiCorp.

The Norwegian crown was lifted by rising oil prices, supported by output cuts and signs of a recovery in demand.

Against the dollar, Norway's crown NOK=D3 rose more than 1% to 10.0821. The Canadian dollar rose 0.52% to 1.4036.

Other commodity currencies also rose and gold gained more than 0.7%, hovering across its highest in over seven years.

The dollar index =USD , which posted gains of about 0.6% last week, gradually gave up early gains and was down 0.12% at $100.25.

U.S. Federal Reserve Chairman Jerome Powell's willingness to print more dollars and extend the monetary stimulus further to fight the coronavirus economic crisis was welcomed by investors. against the U.S. dollar shrank to the smallest position in seven weeks in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

Gains in stocks also lifted other major currencies, such as the Australian dollar, which was up AUD=D3 half a percent at $0.6446. The euro EUR=D3 fell 0.1% to $1.0806.

Against the yen JPY= , the U.S. currency fell about 0.25% to 107.30 per dollar after data showed Japan slipped into recession for the first time since 2015. Policymakers are bracing for the nation's worst postwar slump.

Investors were also looking to Purchasing Managers' Index surveys due from major economies later this week for the next insight into the outlook.

The pound took back some ground lost earlier against the euro and was trading at 89.08 pence EURGBP=D3 after a week-long deadlock over a post-Brexit trade deal with the European Union.

Money markets also ramped up expectations of negative interest rates in the United Kingdom for the first time ever as policymakers debated further steps to support the struggling British economy. FX positions

https://tmsnrt.rs/3bJyfVj

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