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Asian Session – Oil prices reverse back down again but dollar steady

US shares rebounded strongly on Thursday as crude oil prices closed over 2% higher. But Asian equities were mostly in negative territory on Friday as oil was sharply back down on looming supply from Iran. WTI crude futures gained 2.4% yesterday on reports that Russia was considering cutting oil production in 2016 but prices had fallen to $30.37 a barrel in late Asian session today.

Data showing that bank lending in China rose less than expected in December also weighed on sentiment in Asian markets. However, the Chinese yuan was firmer today, rising to 6.5854 yuan per dollar, despite a slightly weaker midpoint.

The Japanese yen was also stronger on Friday after the Bank of Japan’s Governor Haruhiko Kuroda said there were no plans for further monetary stimulus at the moment as the underlying price trend is improving steadily.

The dollar retreated from a high of 118.26 yen earlier in Asian session to drop to 117.67 yen, while the euro fell below 128 yen to 127.89 yen.

Comments from St. Louis Fed President James Bullard also put some pressure on the dollar. Bullard, who is considered to be a hawk, said on Thursday that the continued slide in oil prices is “worrisome” as it’s affecting long-term inflation expectations in the US.

The euro was firmer today after falling to 1.0834 dollars yesterday following the release of the minutes of the December 3 ECB policy meeting. The minutes revealed that a number of ECB policymakers argued for a bigger stimulus at last month’s meeting, raising the prospect of further easing in 2016. The single currency was up at 1.0864 dollar in late Asian session today. It was also higher against the pound at 0.7551.

The pound was steady on Friday following a brief spike upwards yesterday after the Bank of England announced its latest policy decision. The Bank decided to keep rates on hold and said that the downside risks to inflation and growth had increased slightly. Sterling struggled to hold on to the 1.44 level in Asian trading and eased to 1.4390 dollars.

Meanwhile, the Canadian dollar fell to a fresh 13-year low of 1.4528 versus the US dollar as expectations grow that the Bank of Canada will cut interest rates at its meeting next week as oil price weakness takes its toll on the Canadian economy.

Looking ahead to the rest of the day, US data will dominate as retail sales, industrial production and the University of Michigan Confidence index are some of the figures also expected.

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