Oil prices boost commodity currencies

Published: 4 Feb at 7 AM Tags: Euro, Dollar,

Commodity currencies have surged, fueled by a recovery in oil prices and an increase in the price of copper. This contributed to a drop in the dollar index of 0.9 per cent. After hitting 93.25 overnight, the index ended at 93.758.

The euro has been given a boost by hopes that a new debt deal will be secured for Greece. The single currency hit $1.1534 after a low of $1.1312 on Tuesday. Last week saw the euro fall as low as $1.1098, its lowest level in 11 months.

Alexis Tsipras, Greek Prime Minister, said his country did not want to create divisions with international partners and is open to alternative proposals for a new debt accord, something that gave support to the beleaguered euro.

The price of oil has surged by around 20 per cent this week. This has encouraged investors to look to riskier assets. An increase in copper prices has also helped to support the commodity currencies.

The Australian dollar has pulled itself out of a $0.7627 six-year trough to trade around 78 US cents. The Canadian dollar also recovered to hit a two-week peak of C$1.2353 against its US rival. Sterling is up from last month’s low of $1.4952 at $1.5198.