Dollar Slips as Exporter Currencies Find Relief After Oil Routby
Norwegian krone, Brazil's real lead gains versus greenback
Kiwi advances on inflation outlook even as RBNZ cuts rates
The dollar fell for the first time in four days as a commodity selloff moderated, boosting the currencies of some resource-exporting nations.
Norway’s krone jumped from its lowest in more than 13 years, while the Colombian peso climbed from record lows. The Brazilian real rose to its highest since Nov. 25. New Zealand’s dollar surged after the central bank said it expects rates to be low enough to meet its inflation target, after cutting them to a record.
Commodity currencies found a foothold as a slump in the price of raw materials slowed. Oil briefly gained amid a report showing U.S. supplies of the raw material shrank last week, before trading little changed. A downward adjustment in output from the U.S. is needed for a sustained rally, JPMorgan Chase & Co.’s John Normand said on Bloomberg Television.
“It was nothing more than a brief temporary trading bounce within an otherwise very toxic downtrend for commodities,” said Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York. The dollar has suffered from risk aversion during the past few days that “may well be feeding on itself today,” he said.
The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 peers, lost 0.8 percent to 1,220.67 as of 5 p.m. in New York, falling for the first time since Dec. 3.
Brazil’s real and Norway’s krone both added more than 1 percent while Colombia’s peso rose 0.7 percent. The kiwi rose 1.1 percent to 67.20 U.S. cents.
The dollar remains near a more than decade high before the Federal Reserve meets next week to discuss raising rates for the first time since 2006. At the same time, the European Central Bank has reduced its deposit rate further into negative territory, widening the gap between the two central banks’ monetary policy.
That makes the greenback the best place to put money, even taking account of Wednesday’s losses, JPMorgan’s Normand said.
“The easiest investment for the next three to six months is still owning dollars,” said Normand, head of foreign exchange, commodities and international rates research. “I just don’t feel like the drivers that have gotten us to this level in the dollar are played out yet.”