meeting drives down commodity currencies
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[April 18, 2016]
By Jemima Kelly
LONDON (Reuters) - Commodity currencies
slumped on Monday and the safe-haven yen soared after major crude
exporters failed to agree on an output freeze, sending oil prices
tumbling once again.
A plan for oil producers to freeze production at a meeting in Doha
fell apart on Sunday after Saudi Arabia demanded that Iran join in,
leaving the credibility of the OPEC producer cartel in tatters and
the world awash with unwanted fuel.
With a 5 percent fall in crude prices sapping risk appetite across
markets, investors sought refuge in the yen, which hit a three-year
high against the euro and traded close to a 1-1/2-year high against
the dollar. By 0730 GMT it was up 0.6 percent at 109.16 yen per
The Canadian dollar skidded by 1 percent to C$1.2948 versus its U.S.
counterpart , while the Australian dollar fell 0.7 percent to
"After the Doha meeting, we've seen some clear risk-off sentiment
coming into the day, with commodity currencies down," said
Commerzbank currency strategist Esther Reichelt, in Frankfurt.
Reichelt added that the failure to reach a deal at Doha was likely
to spur central banks such as Sweden's Riksbank to talk about
further easing, because of the deflationary effect of lower oil
The euro inched up 0.2 percent to $1.1300. But against the yen, it
fell by as much as 1 percent, to a low of 121.71 yen. That was the
lowest since April 4, 2013 - the day the Bank of Japan launched its
massive asset buying program.
The United States offered a cool response to concerns voiced by
Tokyo that the yen's gains are too sharp and may justify
intervention, with Treasury Secretary Jack Lew saying at a G20
meeting on Friday that he did not see any disorderly moves in the
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The outcome of the G20 meeting and falls in Japanese equities on
concerns about the economic impact from deadly earthquakes in
southern Japan are negative for the dollar against the yen, said
Masashi Murata, currency strategist for Brown Brothers Harriman in
"Intervention in the yen has effectively become difficult," Murata
said. He added that weakness in Tokyo shares can erode the risk
tolerance of Japanese institutional investors and make them more
cautious about overseas investment.
(Additional reporting by Ian Chua in Sydney and Masayuki Kitano in
Singapore Editing by Jeremy Gaunt)
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