The commodity currencies were mostly weaker at the start of the week, dragged down by the lack of agreement in the Doha meeting among oil producers. CAD, AUD, and NZD gapped down against the dollar and the yen on reports that Saudi Arabia has insisted on Iran’s participation in the proposed output freeze, but the latter wasn’t present in the talks.
However, the risk-off vibes were soon erased when Kuwait reported that the strike among its oil industry employees resulted to a massive reduction in production from roughly 3 million barrels per day to just 1.1 million barrels per day. Workers are protesting against the government’s wage cuts and reduction in benefits so the strike is still going on and might continue to weigh on output, easing fears of a supply glut.
USDCAD fell from a high of 1.2992 to the 1.2750 area, CADJPY popped up from its 83.15 lows to a high of 85.39, AUDUSD rallied all the way up to the .7785 level, and NZDUSD is inching closer to the .7000 major psychological mark.
GBP advances on anti-Brexit remarks
The pound was also one of the strongest performers on Monday, buoyed by U.K. Chancellor George Osborne’s remarks on the possible repercussions of a Brexit. He mentioned that this would make it more costly for the government to provide public services and that leaving the EU might also dampen trade activity and business investment.
Opinion polls are showing that respondents are still split between voting for a Brexit or to stay in the EU, although YouGov has reported that there is a shift towards an anti-Brexit sentiment if voters are told that exiting the EU would cost them a hundred pounds each year.
GBPUSD is currently testing the resistance at 1.4300, GBPJPY rallied all the way up to the 156.00 handle, EURGBP is testing support at .7900, GBPAUD is down to 1.8400, GBPNZD is down to 2.0500, and GBPCAD is down to 1.8300.
Pound pairs could be in for more volatility throughout the week, as the UK jobs report and retail sales figures are up for release. The claimant count is expected to fall by 11.9K in March while the unemployment rate is projected to hold steady at 5.1%. The average earnings index is slated to stay at 2.1% while consumer spending could post a 0.1% decline. Another event risk for the week is the ECB interest rate decision on Thursday.
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