Weak Trading Forecast for CAD & NOK, Safe Haven CHF & JPY Predicted to Gain

December 17, 2014 - Written by John Cameron

STORY LINK Weak Trading Forecast for CAD & NOK, Safe Haven CHF & JPY Predicted to Gain

Canadian Dollar, Norwegian Krone, Swiss Franc and Yen Exchange rate Forecasts

More significant movement in the global commodity markets has seen pronounced shifts in the value of several major currencies during today’s session.

The major driver for the market shift has been the ongoing plunge in global oil – the price of a barrel of Brent crude oil briefly dipped to below the $60 level earlier on as OPEC’s decision not to constrict supplies continued to cause downward price pressure. The price of ‘Black Gold’ now stands at barely half of what it was during the middle part of Summer, (it should be noted that oil prices are US Dollar-denominated).

The latest HSBC survey from China last night revealed that the nation’s manufacturing sector moved into contraction last month, prompting Qu Hongbin of HSBC to state that, ‘domestic demand slowed considerably and fell below 50 for the first time since April 2014. Price indices also fell sharply. The manufacturing slowdown continues in December and points to a weak ending for 2014.’ The development suggests that, setting OPEC’s actions to one side, there could be further losses to come for international oil prices.

The big loser in the currency markets today have been the oil-driven Norwegian Krone (currency:NOK) and the Canadian Dollar (currency:CAD). Norway’s Krone dropped to parity against the Swedish Krona (currency:SEK) for the first time in over 14 years during early trading as investors factored-in the likelihood that Western Europe’s premier oil producer will be receiving greatly reduced export income into the medium term. Meanwhile, the Pound Sterling Canadian Dollar exchange rate has jumped to as high as 1.8399 GBP CAD thanks to similar concerns regarding the future prospects of the Canadian economy.

On the flipside, the safe-haven Swiss Franc (currency:CHF) and Japanese Yen (currency:JPY) have both enjoyed positive days. Eric Viloria of Wells Fargo explained that, ‘the Japanese Yen and Swiss Franc tend to be haven currencies so they’re getting some support.’

Jeremy Stretch of the Canadian Imperial Bank of Commerce talked about the current linkage between oil and fear earlier on, stating that, ‘we might be considering some of the wider ramifications of an aggressive capitulation in the oil price. That’s been a catalyst for some of the pressure in equity markets and it’s leading to a degree of risk aversion as we head into year-end.’ This drop-off in the levels of global investor sentiment were illustrated by a continuation of the near-term spike in the VIX ‘fear index’. The measure of investor nervousness jumped to close to the 25.00 level a short time ago, having tipped the scales at below 12.50 at the start of the month.

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TAGS: Currency Predictions Japanese Yen Forecasts Norwegian Kron Forecasts