FX Roundup: Dollar slips, commodity currencies continue to falter

The dollar slipped lower on Wednesday, while commodity currencies continued to struggle on another volatile trading day for the oil market.

At 1556 GMT, the pound was up 0.30% versus the dollar changing hands at $1.4201. Earlier, the Office for National Statistics said employment in the UK reached its highest level for over four decades in the quarter to the end of November.

There were 267,000 more people with jobs in the said three months, when compared to the previous quarter, and 588,000 more than a year ago, ONS added. That helped push the employment rate to 74.0%; the highest since records began in 1971.

Elsewhere, the dollar was down 1.12% against the yen changing hands at JPY116.3200, while the euro fell 0.05% against the greenback exchanging at $1.0903.

Kit Juckes, head of forex at Societe Generale, said, “I am starting to wonder for the first time at what level the Japanese authorities are likely to come into the fprex market and lean against the yen's bounce.

“A move to USD/JPY 115 while Japanese equities fall and fears of deflation return everywhere, may prompt some kind of response. Long yen positions need tight stops from here on.”

Continuing with major crosses, the dollar fell 0.18% against the Swiss franc changing hands at CHF1.0017.

Meanwhile, major commodity linked currencies stayed in negative territory as oil slipped below $28 per barrel. The greenback rose 0.16% versus the Canadian dollar changing hands at CAD$1.4603, while the Australian dollar fell 0.90% against its US counterpart exchanging at US$0.6847. The New Zealand dollar also fell 0.70% exchanging at US$0.6366.

Jane Foley, senior FX strategist at Rabobank, said, “The Canadian dollar was the weakest performing G10 currency during 2015 and the economy has the additional benefit of some modest fiscal stimulus in the pipeline. The Bank of Canada also meets later in the session.

“However, as long as oil prices remain under pressure the CAD will remain vulnerable and we remain sellers on rallies.”

Finally, in Latin America, the dollar rose against major regional crosses, including the Colombian (up 1.92%), Mexican (up 1.67%) and Chilean (up 0.72%) pesos, and the Brazilian real (up 1.18%).