Currencies Mixed As Oil Decides its Direction

The U.S. Dollar initially traded weaker against the Japanese Yen in the premarket hours but dollar strength has returned as the trading week opened on Wall Street. Most markets have quickly reversed this morning with currencies, crude, and stocks all changing directions with the open.

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Crude prices fall, then rise

Crude prices initially fell earlier in the morning, with renewed strength as trading opened in the US. Crude futures expiring in May traded as low as $40.41 but then rebounded over $1 to $41.47. Meanwhile, the Dollar remained resilient against other major currencies. The euro dipped lower against the dollar to 1.1253, down by 0.13% while the British pound sterling fell 0.68% to 1.4385.

Fed and ECB’s tone

As the yen retained its strength against the dollar, the Swiss Franc did not echo the same sentiment and remained weaker by 0.18% to 0.9707. It is to be noted that at the time of diminished risk appetite, investors prefer both yen and Swiss franc, which are considered safe assets.

The U.S. dollar could be signalling to some momentum in stocks after it witnessed steep declines last week when the Federal Reserve kept interest rates unchanged and trimmed the number of estimated quarter-point rates hikes to two from four for 2016.

At the same time, Fed Chair Janet Yellen appeared doubtful if the uptick in U.S. inflation would be sustainable or not, which sent out a strong signal that the central bank will not rush into rate hikes. On the other hand, the European Central Bank’s Peter Praet hinted that there is more room to cut interest rates further, which again disrupted the bullish outlook over the currency.

The U.S. Dollar Index traded higher by 0.14% to $95.22 against the basket of major currencies.

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