Commodity Currencies Fall on China Moves; FOMC Meeting, SNB

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Rates as of 0500 GMT

Market Recap

Another riveting day in the thrilling FX market. Given the volatility weve seen, one might be lulled into thinking that today is Christmas, except its a bit hot for that right now. Stock and bond markets were similarly becalmed ahead of todays FOMC meeting see below.

There is one mystery in the market why was CAD the worstperforming currency when oil was up 2.2? Having said that, it wasnt a big move, but still it bears investigating. USDCAD briefly broke through 1.22 for the first time since early May.

It looks like there are simply some questions around the commodity currencies in conjunction with the fall in commodity prices generally. Copper and nickel, two of the most economically sensitive commodities, were down over 4 yesterday.

The fall in commodity prices, particularly industrial metals, is due to efforts by China to rein in commodity prices and reduce speculation. Bloomberg reported that the Stateowned Assets Supervision and Administration Commission SASAC has ordered stateowned enterprises to limit their exposure to overseas commodities markets and report their futures positions to SASAC. Also, the National Food and Strategic Reserves Administration announced that it will release state stockpiles of metals, including copper, aluminum, and zinc, for the first time in several years.

On the other hand, oil was higher after the American Petroleum Institute API Tuesday announced a massive drawdown in crude oil inventories of…

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