Oil prices rebounded on Tuesday after falling to a 6-month low on Monday as the global supply glut weighed on prices. Brent crude futures fell below $50 a barrel for the first time since January, but a steady recovery on Tuesday helped it climb by 1.6% to $50.30 in late European session.
Other commodity prices such as copper and gold were boosted from the higher oil prices and a muted dollar. Copper prices were 1% higher at $237, while gold was up 0.5% at $1092.09.
Commodity currencies such as the loonie and the aussie benefited from the oil rally. The US dollar was off its highs of 1.3176 against the Canadian dollar and slipped to 1.3128 in late European trading. Meanwhile, the aussie received a double boost as earlier in the day, the RBA’s less dovish stance on future rate cuts drove the currency 1% higher against the greenback. The aussie continued to advance in European trading, rising to 0.7407 to be up 1.6%.
The New Zealand dollar, which often tracks the aussie, reversed some of its earlier gains against the greenback ahead of the release of global dairy prices later today. The kiwi fell to 0.6588 against the dollar in late European session, having peaked at 0.6615.
The euro gave up earlier gains to head lower in afternoon European trading on the absence of any major data. Eurozone produce prices came in slightly stronger than expected with the annual rate at -2.2% in June, but down from -2% in the previous month. Greek stocks appeared to be stabilizing and were down by just 2.2% today after Monday’s 16% slump. The euro slipped to 1.0971 against the dollar from an earlier high of 1.0987 but later bounced back to 1.0974. It followed similar moves against the pound, jumping back to 0.7040 from an earlier low of 0.7012.
UK construction PMI briefly pulled the pound lower as the survey reading fell to 57.1 in July from 58.1 in June, and was below estimates of 58.5. The pound touched a low of 1.5569 against the dollar after the data and managed to jump back above 1.56 before falling to 1.5585 in late European trading.
US factory orders was the only major data to come out of the US. Factory orders in June rose by a slightly better-than-expected 1.8%, an improvement on May’s downwardly revised -1.1%. Orders were boosted by a big jump in transportation equipment. But the core rate for non-defense capital goods excluding aircraft was softer at 0.7%, down from 0.9% in May. This pushed the dollar lower against major currencies.
The greenback was trading around 124 yen against the Japanese currency for much of the day but dropped to 123.97 after the data. Reports earlier in the day that an economic advisor to Japan’s government was quoted as saying that there’s no need for the Bank of Japan to expand its monetary stimulus had little impact on the yen.
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