USD/CHF spikes to 6-day high

FXStreet (Córdoba) - US dollar strengthened versus its European peers at the beginning of the American session with moves exaggerated amid thin trading volumes ahead of the New Year celebrations.

USD/CHF rose more than half a cent in a matter of minutes, breaking above the 0.9900 level to reach a 6-day high of 0.9942 before easing slightly. At time of writing, the pair is trading at 0.9925, recording a 0.51% daily gain.

The greenback also advanced against the euro and the pound, but retreated against commodity currencies, which gained support from the stabilization of oil prices on Tuesday.

On the data front, US goods trade deficit widened to $60.5 billion in November, while S&P/Case Schiller home price index rose 5.54% YoY in October versus 5.4% expected. December consumer confidence index is next on tap.

Dec 29, 2015

Canadian dollar lifted by higher oil prices

The Canadian dollar strengthened at the beginning of the American session and dragged USD/CAD back below 1.3900 to retest daily lows as oil prices rally.

Oil slump may cause Saudi Arabia to abandon its dollar peg

The plunge in oil prices in the last on year can be attributed to the global oil glut largely the result of OPEC’s decision to pump record volumes with the objective to defend market share and eventually drive out US shale producers. There remains a strong possibility that crude prices will further fall in 2016. With oil prices touching multi year lows, the richer gulf nations have begun to feel the pinch. The IMF had warned in October that Saudi Arabia will likely run out of money within five years unless it adopts drastic measures of reform. Saudi Arabia, which championed the market share strategy, ran a deficit of 367 billion riyals (€91 billion billion) or 15 per cent of GDP in 2015. The riyal dropped in the forwards market to its lowest since 1999 following a sharp increase in budget deficit. The riyal suffered on fears that Riyadh may have to abandon its peg to the US dollar.