Oil prices tumbled on concerns of a supply glut, which saw WTI crude slipping below $45 a barrel for the first time since the November OPEC deal to cut production. The Aussie headed for a weekly loss and the commodity-linked Canadian dollar was hit hard as well. Risk aversion in the markets helped boost the safe haven yen.
The dollar fell to 112.08, moving off yesterday’s seven-week high of 113.04 yen. The main risk event for the greenback will be the US non-farm payrolls report which is due later in the day. The forecast for April is for a higher number from March, with most economists seeing the US economy adding 185,000 jobs last month. Meanwhile, weekly jobless claims data released yesterday showed claims fell in the prior week. Yesterday’s US House vote on the healthcare bill did little to lift the dollar. A bill to repeal and replace Obamacare was passed in the House of Representatives and it now has to pass the Senate as well.
In other news, The Reserve Bank of Australia released its statement on monetary policy (SOMP) today which explained that the decision to leave interest rates unchanged at the latest policy meeting would be consistent with sustainable growth in the economy and for achieving its inflation target rate. The RBA kept its forecasts for underlying inflation and GDP unchanged for this year.
The relatively upbeat SOMP from the RBA failed to impact the aussie, which extended losses against the greenback today to hit a new four-month low of $0.7367 in Asian trading, amid a commodity crunch. The aussie / dollar was driven lower by tumbling prices of iron ore, a major Australian export. Dalian iron ore prices are down over 7% today.
The latest Elabe poll showed centrist Emmanuel Macron winning far-right candidate Marine Le Pen in the second round of the French presidential elections on Sunday. Since this outcome is mostly already priced in by the markets, there was little reaction in the currency markets to the poll. The euro held onto yesterday’s gains versus the dollar to trade at a new five-and-a-half month high of $1.0990 in today’s Asian session.
Looking to the rest of the day, aside from the US and Canadian jobs reports, attention will also be on Fed officials including Fed Chair Janet Yellen and Vice Chair Stanley Fischer, who will be speaking later.