Rather than look at how economics suggests FX “should” behave when oil prices rise, we examine how FX “has” behaved in the past. Oil producers are the winners. However, one might have expected all “risk on” currencies to suffer and safe haven FX to thrive with lower equities. This has not been the case, with AUD and NZD holding their own, and JPY, CHF and USD suffering. Buying NOK-JPY could be a tactic for those awaiting outsized oil price rises. In EM FX, history points to BRL and MYR gains, and possible INR weakness.
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Global Research