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Oil Producer's Currencies Are Collapsing As Brent Breaks Below $40

Tyler Durden's picture




 

With the oil price collapse accelerating (Brent just dropped below $40 for the first time since Feb 2009), the currencies of major oil-exporting nations - such as the Canadian dollar and Norwegian crown - are plunging...

Not helped by weakness in China trade data, questions over global growth and inflation expectations are growing. Oil-exporting nations  (and growth-linked currencies) are getting monkey-hammered...

 

Just when traders thought the bottom was in...

 

As Reuters notes, with lower oil prices likely to add to global deflationary concern and Chinese data doing little to improve sentiment, risk appetite remained fragile.

The Canadian currency fell 0.4 percent against the U.S. dollar, to C$1.3555. That was the U.S. dollar's strongest level since mid-2004.

 

Similarly the Norwegian crown fell a six-week low against the euro.

 

"If you are looking to play weak oil prices, you would want to sell the Canadian dollar and the Norwegian crown," said Jeremy Stretch, head of currency strategy at CIBC World Markets. "With oil prices falling and some even talking about oil falling to $30 a barrel, revenues for these countries will take a beating and hence their currencies will remain under pressure."

 

 

The Australian dollar fell 0.6 percent to $0.7220 AUD=D4 as this week's tumble in iron ore and the latest Chinese data weighted on the currency's woes.

 

Citi recommended that investors sell the Aussie through options. "The weakness in the Chinese economy will spill over to Australia through commodities demand as well as reduced demand for the Australian dollar via reserves and other channels. This should leave it vulnerable to an eventual leg higher in the dollar," they said.

Charts: Bloomberg

 

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Tue, 12/08/2015 - 16:37 | 6895587 Groundhog Day
Groundhog Day's picture

all hail the USD

Tue, 12/08/2015 - 16:56 | 6895696 OldPhart
OldPhart's picture

Oil is at it's lowest point in ten years.  Think we're going to see $0.50/gal gas?  Not a chance.

Tue, 12/08/2015 - 17:02 | 6895735 Not My Real Name
Not My Real Name's picture

The dealer's cost of gasoline could go to $0.00 and we'd still be paying close to a buck per gallon in state and federal taxes -- if not more.

Tue, 12/08/2015 - 17:45 | 6895950 Raisuli
Raisuli's picture

 From: https://www.eia.gov/tools/faqs/faq.cfm?id=10&t=10

 

Average gasoline tax is about $0.45. I guess that is "close" to a buck, but it is not more.

Tue, 12/08/2015 - 18:59 | 6896288 Not My Real Name
Not My Real Name's picture

Too simplistic. In California it's broken out like this:

 

  • 39 cents for state excise tax
  • 30-42 cents for sales tax
  • 10 cents for cap and trade “fee”—tax on a tax
  • 18.4 cents federal excise tax

That is more than a buck in some cases. As usual, the biggest profiteer on gasoline is Big Government -- not Big Oil.

http://watchdog.org/232083/california-gas-taxes/

Tue, 12/08/2015 - 17:24 | 6895835 BandGap
BandGap's picture

The dollar being (over)valued this way was predicted as part of the final run to oblivion.

A lot of naked emperors these days.

Tue, 12/08/2015 - 18:12 | 6896075 Angel_Eyes
Angel_Eyes's picture

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Tue, 12/08/2015 - 16:39 | 6895597 Glass Seagull
Glass Seagull's picture

 

 

All we need is some IMF bailouts, and these nasty recessions become outright depressions...with compressed asset values and political guarantess for the oligarchs.

Tue, 12/08/2015 - 16:40 | 6895598 LawsofPhysics
LawsofPhysics's picture

Okay. Keep the oil, do and make real shit with it or ask for something a bit more real in exchange.  Why do people think this will be good for the petrodollar?

Remember, the velocity of a dead currency is in fact zero.

Tue, 12/08/2015 - 16:40 | 6895605 Chuckster
Chuckster's picture

This is horrible.....where will it end?  I don't remember any Saudis coming over and helping me pay my gas bill.

Tue, 12/08/2015 - 16:58 | 6895708 redd_green
redd_green's picture

Nope but they sent a bunch of folks over here to shoot at us.  That gota count fo' som thin.

Tue, 12/08/2015 - 17:43 | 6895941 COL Jackson
COL Jackson's picture

Im hoping those Dbags get what they wish for.  Here's to $10 oil. Saudi will be a F%^*ing mess with $10 oil.  All those pampered princes will get strung up on a minaret in a Saudi winter.

Tue, 12/08/2015 - 19:49 | 6896528 Lucky Leprachaun
Lucky Leprachaun's picture

No matter how low the price goes they'll find money for mosques and Islamic terrorists  in the West.

Tue, 12/08/2015 - 16:42 | 6895615 explosivo
explosivo's picture

The ruble is at 70 now and it is one of the only decent currencies on earth.

Tue, 12/08/2015 - 16:48 | 6895646 LawsofPhysics
LawsofPhysics's picture

Well, I do remember buying the ruble when it was somewhere around 8,500 per dollar...

Yes, public debt is Russia is low, that's what bankruptcy/default  are all about.  'merica's turn.

hedge accordingly.

Tue, 12/08/2015 - 16:49 | 6895658 ShorTed
ShorTed's picture

Decent for what, shorting?  It'll be a buy someday, just not for a while.

Wed, 12/09/2015 - 02:45 | 6898177 HopefulCynic
HopefulCynic's picture

I wouldn't wait to long a year max two. 

Tue, 12/08/2015 - 16:45 | 6895631 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Death to America!

Tue, 12/08/2015 - 16:54 | 6895688 redd_green
redd_green's picture

Buy low!  Sell high!  

Tue, 12/08/2015 - 16:57 | 6895705 OldPhart
OldPhart's picture

I thought it was BTFATH.

Tue, 12/08/2015 - 16:58 | 6895711 redd_green
redd_green's picture

O yah,  I got ti wrong.    Thanks OP!

Tue, 12/08/2015 - 16:55 | 6895690 redd_green
redd_green's picture

Sell Low.  Buy lower!

Tue, 12/08/2015 - 16:56 | 6895701 The Greek horse
The Greek horse's picture

This is obviously by design to crush Russia. The elites are manufacturing an economic war!! Now I see clearly why Syria is so important to Mr. Putin.. Saudi Arabia won't stop production and ISIS OIL is in the black market?!?= Low Prices.    UK, USSA and Israel axis of EVIL! 

Tue, 12/08/2015 - 17:01 | 6895732 803Mastiff
803Mastiff's picture

Tales of a "Currency Assassin" . If your swimming with others in the ocean and encounter hungry sharks, a good survival tactic is to stab the guy next to you and swim full throttle away from the scene.

 

 

Tue, 12/08/2015 - 17:26 | 6895848 BandGap
BandGap's picture

But try not to splash too much.

Trade War --->Currency War ---> Shooting War

Tue, 12/08/2015 - 17:04 | 6895743 dot_bust
dot_bust's picture

Crude oil futures are traded through the super-corrupt CME Group.

Central banks get discounts for trading EVERYTHING through CME Group and Comex
http://www.gata.org/node/14385

Tue, 12/08/2015 - 18:53 | 6896276 Herdee
Herdee's picture

$20 bucks a barrel and/or bust.

Tue, 12/08/2015 - 19:13 | 6896363 Raul44
Raul44's picture

For long term investors, AUD is a great opportunity. I expect huge up trend sometimes soon, probably at the beginning of next year. Just look at weekly and monthly, their "advice" only confirm that.

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