Commodity currencies hit by worst oil price slump in a year

The Canadian and Australian dollars have slipped to two-month lows this morning as global oil prices suffered their worst daily slide in 12 months late on Wednesday.

A fresh bout of concerns over a global supply glut sent oil prices falling as much as 6 per cent after data on US crude inventories hit a record, according to the Energy Information Administration yesterday.

The price of West Texas Intermediate, the US benchmark, and Brent crude, the global marker, are struggling to recover this morning, up just 1 per cent at publication time after the ninth consecutive rise in US oil stocks.

Commodity-related currencies are taking a hit from the oil sell-off this morning. Canada’s dollar has fallen to its lowest level of 2017 this morning at C$1.3509 against the US dollar, with Australia’s equivalent slipping by 0.3 per cent to a seven-week low of $0.7505. Norway’s krone has lost 0.15 per cent to its weakest level since 11 January.

The currencies’ softness has been coupled with a steadily stronger US dollar this month. It is up 0.8 per cent in March, as investors are now betting on a near 100 per cent probability of the Federal Reserve’s first rate rise under the presidency of Donald Trump.

The dollar index, which tracks the currency against a basket of its major trading peers, is broadly flat this morning at 102.13.