Agreement receives mixed reaction in currency market
The US Dollar was boosted yesterday as major oil producers Russia and Saudi Arabia came to an agreement in regards to oil production this year. Initially oil futures were boosted although those gains soon waned as the markets received further news that Iran was absent from the deal and the actual agreement was to freeze production to January levels as opposed to cutting production.
News of the agreement boosted risk appetite amongst investors with the US dollar rising against all other major currency pairs with the exception of the Japanese Yen, most notably hitting a two week high versus the British Pound which was trading at $1.4283, with Sterling falling roughly 1% against the Dollar.
Once news of Iran’s absence and the production freeze as opposed to production cut hit markets, the reaction was mixed with the greenback strengthening against most major currencies and yet the Japanese Yen, traditionally considered a safe haven currency, rose against the Dollar suggesting many investors were unsatisfied with the outcome of the oil agreement, leaving Iran’s intentions under the spotlight.
FOMC to take centre stage today
Later today the FOMC minutes will take place providing us with an insight into the relative health and future prospects for the US economy. This meeting could create further volatility in US Dollar exchange rates as it could outline monetary policies for the US moving forward. I’m not expecting a quiet end to the week for the greenback as Thursday also see’s inflation and employment figures releases which could create further market movements.