Crude Oil emerged victorious on the first trading day of the month in February, rising as much as 1.5% for the day; in a clear follow through from last Friday’s price action, which saw the “Black Gold” lift off from the lows of 43.91. In the past weeks, the falling prices have seen taking its toll as the oil rig count started to decrease dramatically, clearly pointing to the fact that some US oil companies were feeling the heat in light of falling prices.
With rising Crude oil prices, oil exporting countries and their respective currencies managed to ride the trend as well. The Canadian dollar, also posted impressive gains for the day across the board, rising as much as 1% for the day. The USDCAD, which enjoyed a strong up trend, saw the pair retreat from the highs of 1.27 levels to close below 1.25.
A weaker Greenback, helped push the commodity risk currencies as well with both the Kiwi and the Australian dollar both managing to rally for the day ahead of the RBA meeting during the overnight session. As the RBA cut interest rates in a move that was widely expected, the commodity risk currencies trimmed their gains to trade in the red.
The US Dollar index, as noted in our article yesterday opened the week lower. A mixed PCE data alongside weaker PMI manufacturing data managed to keep the Dollar bulls in check intraday for the most part. The same theme is likely to play out into today’s session where there are no major market events scheduled out of the US ahead of Wednesday’s ADP numbers.
The weaker manufacturing prices reflected the major theme amongst exporters, who were seen bearing the brunt of a stronger US Dollar, something which has made its mark in the quarterly earnings report for most of the companies in the US, especially those focused on the export sector as well as travel and tourism sectors.
We had earlier this year commented about the whole theme of the US Federal Reserve’s rate hike speculation which has been the only thing going keeping the trend alive in the Greenback. With the most latest FOMC statement revealing that the Fed is still committed to a rate hike post April 2015, the markets will start to get more and more nervous in the run up to the future FOMC meetings should the current trend in the economic data from the US continue to disappoint.
Later this week, the US Nonfarm payrolls data is due to be released, which if beats estimates should help the Dollar to trim some of its losses. With the expectations already to the downside, near 231k region, the NFP numbers for January is ideally tipped to post better than expected growth in the US labor markets in January. Also in focus will be the unemployment rate which is currently at 5.6%.
