OPEC meets on Thursday – Nomura
Analysts at Nomura suggest that the OPEC meeting this Thursday poses event risk for commodity currencies, especially, in their opinion, CAD and NOK.
“A nine-month extension of the production cut seems to be expected, and speculative crude oil positions are skewed to being net long. As such, a negative oil price reaction to a disappointment is likely to be bigger, in our view, that any boost to oil prices if a nine-month extension is confirmed. We believe an OPEC disappointment poses short-term downside risk to NOK and CAD in the G10 FX space, but that the impact should be relatively muted.”
“The sensitivity of NOK and CAD to the oil price has declined recently, and neither has benefited from the recent rise in oil price by as much as the historic relationship suggests they should have. We examined why this may be and judge that the lower sensitivity is likely to be sustained a little longer.”