MUFG Research discusses its trading bias on oil-based currencies.
“The oil-related currencies of the currencies of the NOK (-4.1% vs USD) and RUB (- 3.5%) have been two of the worst performing currencies this month. In contrast, the CAD (-0.6%) has proven more resilient as it has declined more modestly. The underperformance of oil-related currencies has coincided with a correction lower for the price of oil,” MUFG notes.
“The recent sell off has made oil-related currencies of CAD, NOK and RUB more attractively valued. However, we do not believe that the risk-reward balance is favourable yet for building longs. The sell off for oil currencies could yet extend further if COVID fears continue to intensify and OPEC+ does not slow production,” MUFG adds.
Head of Trading Dimitar Kalapov