FOREX-Dollar falls as oil attacks send investors to safety

Published 16/09/2019, 01:50
FOREX-Dollar falls as oil attacks send investors to safety
USD/CHF
-
USD/NOK
-
XAU/USD
-
GC
-
DXY
-

* 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

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 more than 15% following the strikes on two

plants, including the world's biggest petroleum processing

facility in Abqaiq, knocked out more than 5% of global oil

supply. Yemen's Iran-aligned Houthi group claimed responsibility for

the damage, but the U.S. has pointed the finger directly at

Iran. The Canadian dollar CAD=D3 rose 0.5% in morning trade in

Asia to 1.3224 per dollar. The Norwegian krone NOK= rose

almost 0.6% to 8.9363 per dollar.

Both currencies often move together with the oil price

because the countries are major oil exporters.

The attacks wiped out last week's ebullient risk appetite

and prompted U.S. President Donald Trump tweeted the United

States was "locked and loaded" for a response.

The safe-haven Japanese yen and Swiss franc each lifted at

least 0.3% on the dollar. The yen JPY=EBS hit 107.60 per

dollar and the franc CHF= touched $0.9871. Gold XAU= jumped

by 1%.

Against a basket of currencies .DXY the dollar was 0.2%

lower at 98.053.

"If that part of the reason for last week's fall in oil and

improvement in geopolitical risk sentiment was the news of John

Bolton's sacking ... and thoughts this was a precursor to some

form of rapprochement between Trump and Iran, then it is no

longer valid," said Ray Attrill, head of FX strategy at National

Australia Bank in Sydney.

Beyond oil, currency markets are awaiting the outcome of

central bank meetings in the U.S. and Japan this week and

crucial economic data in Australia and New Zealand that could

determine the rates outlook in the Antipodes.

Much of the risk appetite on display last week was driven by

signs of a thaw in U.S.-China trade tensions, with both sides

offering olive branches ahead of trade talks next month.

However with few solid signs of progress, sentiment remains

fragile.

"Geopolitical risks and central bank rhetoric remain key

drivers of risk this week," Australia and New Zealand Banking

Group analysts said in a note.

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

Markets also expect the Bank of Japan to push interest rates

further into negative territory, with a third of economists

polled by Reuters last week expecting stimulus to be ramped up.

Japanese markets are closed on Monday for a public holiday.

China's premier on Monday said maintaining national economic

growth above 6% is difficult, with protectionism weighing.

Retail sales and industrial production figures due on Monday

are likely to give further insight into the health of the

world's second-largest economy. The Chinese yuan was flat in

morning trade offshore CNH= .

The pound GBP=D3 held last week's gains, as fears of

Britain crashing out of the European Union without a divorce

deal ebbed, while a news report on Friday also raised hopes that

a deal could be secured by Oct. 31. It steadied just under its highest since July 25 at $1.2491.

The euro EUR=D3 was steady at $1.1077.

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.