Global overview
The US dollar was flat in Wednesday trade after rebounding from two-month lows earlier in the week. US shares were mostly higher, albeit seeing only small gains. Oil prices continued to fall hitting the commodity currencies like the Aussie and the CAD.
Commodities fall further, led by crude
The commodity currencies like the Australian and Canadian dollar led losses overnight as commodities extended a recent decline led by big losses in crude oil markets.
West Texas Intermediate (WTI) crude fell another 2.3% overnight with the benchmark contract down 17.5% over the last three weeks. Brent oil fell to USD85 per barrel overnight. Oil is now near four-month lows.
Copper fell 1.1% while gold lost 1.0%.
Aussie leads losses
The Australian dollar led the losses with the AUD/USD down 0.5%. The pair gave back the gains seen after last week’s Federal Reserve meeting. The Aussie was lower in most other markets.
Other commodity currencies were also weaker with the NZD/USD down 0.4% and the USD/CAD up 0.2%.
The euro and pound were broadly steady overnight.
The focus remains on the USD/JPY with the pair up 0.4% overnight and nearing 151.00. FX markets remain concerned about the potential for intervention from Japan’s Ministry of Finance.
Slow growth to China
The recent falls in commodities are partly due to a reversal of speculative activity after a sharp rise in oil after Hamas’s early October attack on Israel. While tensions remain heightened in the Middle East, the impact on oil markets has been minimal.
But ongoing worries about global activity – particularly in China – have also weighed on key industrial markets.
Yesterday’s commentary from People’s Bank of China policy advisor Lui Shinjin seems to indicate that the Chinese government is resigned to “medium-speed” growth over the next five to ten years.
The commentary confirms that the PBOC sees the years of double-digit growth – seen from 2000 to 2020 – as a thing of the past.
Lui also noted that construction, infrastructure and exports sectors also remain a drag on growth.
Aussie leads commodity currencies lower
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 6 – 11 November
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
