Oil price rise underpins Canadian dollar, greenback eases

Singapore (Dec 27)  The dollar eased against a basket of currencies on Wednesday, while commodity-linked currencies such as the Canadian dollar were underpinned by this week's rally in oil prices.

Oil prices had surged to 2-1/2 year highs on Tuesday, boosted by news of an explosion on a Libyan crude pipeline as well as voluntary OPEC-led supply cuts. That helped lend support to the currencies of commodity exporting countries, with the Canadian dollar touching a high of C$1.2678 at one point, its highest level since Dec. 6.

Similarly, the Australian dollar rose 0.2 percent to $0.7746 , reaching its highest level in two months.

The U.S. dollar eased 0.1 percent against a basket of six major currencies to 93.188 .

Moves among major currencies were subdued, with the euro inching up 0.2 percent to $1.1876 . The dollar held steady against the yen at 113.19 yen .

Monetary policy convergence could weigh on the dollar next year, now that central banks other than the U.S. Federal Reserve have either begun moving away from monetary stimulus, or started to raise interest rates, said Peter Chia, FX strategist for United Overseas Bank in Singapore.

Reuters