The US dollar was in retreat on Wednesday after oil prices reversed their gains made yesterday to head back down again. Oil came under pressure after the International Energy Agency said in its monthly report that the oil market could “drown in oversupply” unless something changes. WTI crude futures hit a fresh 2003 low of $27.49 a barrel in late Asian session today, falling below Brent crude which was down at $28.11.
Safe haven currencies such as the euro and the yen advanced higher as the oil slump soured risk sentiment. The dollar was back below the 117 level in today’s Asian trading at 116.73 yen, having peaked above 118 yen yesterday. The euro climbed to 1.0963 dollars before easing to 1.0941 in late session.
The pound was trading near Tuesday’s lows when it slumped on dovish comments from Mark Carney who ruled out a rate rise anytime soon. Sterling hit a 7-year low against the dollar and a one-year low against the euro. It was last trading at 1.4168 dollars and 0.7721 pounds per euro and could come under pressure again later today when the monthly jobs data are released.
The New Zealand dollar was one of the biggest fallers today when it plunged on much weaker-than-expected inflation figures. Prices fell by -0.5% on a quarterly basis in the fourth quarter of 2015, below estimates of a 0.2% drop. Inflation was up just 0.1% on an annual basis. This raised the prospect of further rate cuts by the Reserve Bank of New Zealand, sending the kiwi sharply lower to 0.6361 against the greenback from around 0.6485 before the data.
The Australian dollar was also weaker, dropping to 0.6861 against the US dollar as lower Australian consumer confidence readings for January and a 1% drop in Chinese stocks weighed on the currency.
Coming up later today, UK unemployment and US inflation data are likely to attract a lot of attention. While the Canadian dollar could come within reach of 1.47 versus the greenback if the Bank of Canada cuts interest rates at its policy meeting later today.
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