BLOOMBERG.COM
After ignoring volatile crude prices for most of the year, the currencies of Norway and Canada are succumbing to a selloff that has knocked 12 percent off the value of their biggest export this month. Russia’s ruble, a favorite destination of carry traders using borrowed dollars to invest in higher-yielding assets, has proved more resilient. “In the past few months, oil prices had taken the backseat, with shifts in interest-rate differentials and monetary policy expectations chiefly driving NOK and CAD,” said Themos Fiotakis, co-head currency and rates strategy at UBS Group AG. “Now both drivers are lining up. With inflation declining at the same time as oil dropping, the co-movement between NOK, CAD and oil prices is resurfacing.”
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After ignoring volatile crude prices for most of the year, the currencies of Norway and Canada are succumbing to a selloff that has knocked 12 percent off the value of their biggest export this month. Russia’s ruble, a favorite destination of carry traders using borrowed dollars to invest in higher-yielding assets, has proved more resilient. “In the past few months, oil prices had taken the backseat, with shifts in interest-rate differentials and monetary policy expectations chiefly driving NOK and CAD,” said Themos Fiotakis, co-head currency and rates strategy at UBS Group AG. “Now both drivers are lining up. With inflation declining at the same time as oil dropping, the co-movement between NOK, CAD and oil prices is resurfacing.”
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