Rising oil prices send commodity currencies soaring, Ruble sinks

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16 April 2018


With the EUR/USD exchange rate stuck in a narrow range last week, the action in currency markets was found away from the major crosses.

eopolitics sent commodity prices soaring, dragging along the currencies of commodity-exporting countries. In the G10, that meant the Australian, Canadian and New Zealand Dollar’s were the winners. The two biggest movers of the week were, however, the Colombian peso, which benefited from the sharp oil price increase driven by tensions between the US and Russia, and the Russian ruble, which dropped by nearly 7% on news of harsher than expected sanctions from the US.

This week brings some key data for Sterling, including labour earnings on Tuesday and March inflation figures on Wednesday. It should be a relatively quiet week elsewhere, so geopolitical developments will be front and centre in currency trading.

Major currencies in detail


Sterling was the top performer among the major G10 currencies last week, buoyed by continued reduction in political uncertainty around Brexit. The UK currency hit its highest level against the US Dollar since January on increasing conviction that the Bank of England will hike rates again in May also contributed to the positive tone.

Reports on inflation and the labour market this week provide the last key data points before the MPC’s decision next month. We think it would take a really shocking negative surprise to derail the increase in rates, and think Sterling should continue to trend higher against the Euro.


The fall in Eurozone industrial production for the month of May pressured the Euro modestly lower, and it added the latest in a streak of negative surprises from the Eurozone economy. We are not ready to change our forecasts yet, since these surprises come in the wake of a period of exceptionally strong data, but the trend definitely bears watching.

Data is light this week in Europe, so the Euro should take its cues from developments elsewhere while we await the key ECB meeting on 26th April.


The minutes from the March meeting of the Federal Reserve, released last week, were generally hawkish. Most Fed members seem to have upgraded their expectations both for the state of the US labour market and the pace of needed interest rate hikes. The inflation report for the month of March also saw core inflation, which excludes volatile food and energy items, peek above the 2% Federal Reserve’s target for the first time since 2016.

In the absence of key macroeconomic news, attention will be focused on an unusually crowded calendar of Federal Reserve member speeches.