The Australian Dollar recovered from its earlier losses against the Canadian Dollar on Tuesday afternoon as the price of the North American nation’s largest export commodity, Crude oil fell in value as concerns eased over global oil supplies.
The value of the commodity fell despite concerns over the geopolitical situation in the Middle East, Ukraine and in particular Libya.
Worries over a disruption to oil supplies softened after the Libyan government reached a deal with rebels who had occupied two of the nation’s largest oil terminals.
The easing of worry is likely to be short-lived however as heavy fighting between rival Libyan militias at Tripoli International Airport and battles in the eastern port city of Benghazi has raised uncertainty over plans to reopen the terminals.
If they are opened then an extra 500,000 barrels of the commodity will enter the market per day.
The ‘Loonie’ is also under pressure ahead of Wednesday’s Bank of Canada interest rate decision.
The Central Bank is widely forecast to leave interest rates unchanged at 1%, the level it has remained at for the past four years.
The currency could weaken if the bank’s policy makers attempt to talk down the currency.
‘The BoC risk is that Governor Poloz strikes a cautious tone, highlighting that a strong currency risks weighing on important economic fundamentals’ said Camilla Sutton, the chief Forex strategist at Scotiabank’s global banking and markets operations.
The Australian Dollar meanwhile remains softer against the US Dollar and weaker against the British Pound after the Reserve Bank of Australia left interest rates on hold at 2.5% and as some policy makers talked down the currency.
Wednesday could see the ‘Aussie’ recover its lost ground if the latest GDP data out of China, Australia’s largest trading partner comes in strongly.
Industrial production and retail sales data are also due out of the world’s second largest economy.
Current AUD Exchange Rates