Oil prices hit an intraday high of $139.89 a barrel, sending the Canadian, Australian and New Zealand dollars higher.
Even though crude prices eventually reversed to end the day lower, the commodity currencies are still positive on the day. Part of the reason why the rise in oil prices did not stick is because there wasn’t one concrete reason to explain this move. Instead, the buzz in markets was that US dollar weakness, possible sanctions on Iran, a fire on a North Sea platform and option expiration was behind the move. In other words, the new record high in oil was once again, driven by speculators. This managed to take the focus of currency traders off of economic data which disappointed in both Canada and New Zealand. New motor vehicle sales fell 2.6 percent in Canada during the month of April while manufacturing activity slowed to 3.7 percent from 8.3 percent in New Zealand during the first quarter. Service sector PMI was slightly better than expected but still in contractionary territory.