FX round-up: Commodity currencies see spike in volatility, cable stronger

Commodity currencies were back on the front foot in late trading, having snapped back quickly from the large losses seen at the start of the session as news broke that many of the world's largest oil producers meeting in Doha, Qatar had failed to reach an agreement to freeze their levels of output - while the main currency

Oil prices were sent hurtling lower by about 6.0% overnight, hitting sentiment in all asset classes during Asian trading hours, dragging even the Japenese yen below the 108.0 mark versus the greenback.

However, as of 18:50 BST dollar/yen had recovered and was changing hands 0.05% stronger at 108.85.

That came as oil futures rebounded following reports of outages in oil supplies from Kuwait; although some strategists and traders expected those disruptions would prove fleeting.

To take note of in the case of the yen, on 15 April US Treasury Secretary Jack Lew described recent moves in FX markets as "orderly", in effect signalling that yen selling by officials in Tokyo would be frowned upon, according to some market commentary.

Large speculators' 'long' positions in the yen - bets that it would appreciate - outnumbered 'shorts' for a fourth consecutive week over the seven days ending on 12 April, rising to a net 66,190, according to the latest data published by the Commodity Futures Trading Commission.

Also on Friday, G-20 leaders reaffirmed their pledge not to pursue artificial weakness in their currencies in a bid to boost their competitive edge.

Other major currency pairs had also recovered their poise by late afternoon, with cable up by 0.57% to 1.4285 despite the Treasury warning of the long-term detrimental effect which exiting the European Union would have on the UK economy.

The UK economy would be 6% smaller by 2030, leaving a potential £45bn hole in public finances if Britons voted to leave the EU, according to analysis from the Treasury.

Finance Minister George Osborne added that this would be the equivalent of £4,300 per household and taxes would have to rise 8% to bridge the gap in tax receipts.

Euro/dollar was appreciating by 0.34% in tandem, to 1.1322, having remained little changed throughout the bout of volatility seen in the crude oil futures.

Commodity currencies see spike in volatility

Nevertheless, the sharpest movements were seen among the commodity currencies, particularly those most closely linked in investors' minds to the price of oil.

In the G7 space the Canadian dollar was the most battered early on Monday, but by the close USD/CAD was in fact off slightly by 0.06% to 1.2812.

USD/CAD traded in a fairly wide range on Monday, hitting intra-day lows and highs of 1.2795 and 1.2992, respectively.

Russia's ruble also ended the day little changed, with USD/RUB down 0.08% to 66.4325. However, at the opening bell traders were whipsawed by a violent jump higher to 68.7876.

The US dollar did however cling on to its gains against the Brazilian real and was to be seen 0.91% stronger at 3.5641 even after the country's congress approved a motion to impeach president Dilma Rousseff.