Wainwright Marks Management: Oil Losses Weigh On Commodity Currencies

Commodity-linked currencies reacted negatively to the drop of oil prices as investors got disappointed following OPEC’s failure to agree on an output freeze, sending prices tumbling four percent on Tuesday.
New Zealand dollar and its Australian cousin moved lower against the buck, as declining oil prices weighed on the risk-sensitive, higher yielding assets across the board.
Oil prices plummeted after major producers, including Russia and Alegria, didn’t attend a summit in Doha for the world’s top exporting countries to discuss a potential production freeze.
Andrew Miles who is the Head of Corporate Trading at Wainwright Marks Management said “The meeting between OPEC and non-OPEC producers in Qatar was on fire after Iran’s oil minister said that his country won’t cap its production as it seeks to regain market share following the lifting of US sanctions.”
According to EIA, Iran’s daily oil output is now surpassing 4 million barrels per day, up from 3 million in January, but still short of its pre-embargo level of around 5.0 million.
“In response, Gulf states demanded Iran to be a party to any output deal, otherwise it won’t cap its production. Saudi Arabia, the world’s largest oil producer and the cartel’s de facto leader, had insisted that Russia and non-Opec producers to join any future agreement.” George Peterson, Director of Private Clients at Wainwright Marks Management added.
Aussie has been under pressure after the RBA minutes indicated a slight improvement in the domestic economy and that interest rate rise will not be taking place soon.
Kiwi was sold off after the country’s consumer price index slumped by 0.4 per cent in the March-June quarter, worse than a forecast for an uptick to 2.1 per cent year-over-year.
Source: Wainwright Marks Management
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