Commodity Currencies Hit By Oil Rally Halt
Commodity currencies such as the Australian, the New Zealand and the Canadian dollars weakened against their major counterparts in the Asian session as the price of oil reversed course.
Oil prices surged last week on the prospect of new central bank stimulus and expectations that a snowstorm in the Eastern U.S. would boost heating-oil demand.
But the markets were brought back to reality, due to latest signs of weaker demand and unyielding supply from Saudi Arabia.
“The strong link between oil and currencies and equities continues, with lower oil prices overnight meaning weaker commodity currencies, a stronger yen and euro and lower equity prices,” said Jason Wong, currency strategist at Bank of New Zealand.
Mr. Wong added that CAD is the worst-performing major currency on weaker oil prices.
Gold prices higher on more safe-haven buying
Gold prices are higher and scored a nearly three-month high in early U.S. trading Tuesday.
February Comex gold was last up $7.60 at $1,112.90 an ounce. March Comex silver was last up $0.081 at $14.335 an ounce.
The climb came as traders were faced with another nervous day on the financial markets, with oil sliding below $30 a barrel again.
A slightly weaker dollar also supported gold prices, as the weaker dollar tends to support dollar-denominated commodities, such as gold, as they become cheaper to other currency holders.
World stock markets
World stock markets are mostly lower Tuesday. A sharp stock selloff was triggered in China, where the Shanghai Composite Index closed 6.4 percent lower, and is now down 22 percent so far this year.
Japan’s Nikkei closed 2.4 percent lower as investors feared the Bank of Japan taking no action at its policy meeting this week.
Europe’s main stock markets followed the pack — with the FTSE 100 down 1.6% or 96 points lower at 5780 in early trading as Brent crude traded below $30.