U.S. Dollar Falls Against Oil-Linked Currencies

Higher oil prices are beneficial for oil-producing nations and their currencies.

The dollar fell Monday as a rally in crude oil prices depressed the greenback against the currencies of commodity producers.

The WSJ Dollar Index, which measures the U.S. currency against 16 others, was recently down 0.6% to 91.32. The dollar fell 2.4% against the Russian ruble, 0.4% against the Canadian dollar and 0.7% against the Norwegian krone.

U.S. oil prices rose more than 2% after more oil-producing nations agreed to slash production, a move aimed at propping up prices in the oversupplied oil market.0

Higher oil prices are beneficial for oil-producing nations and their currencies.

Meanwhile, investors looked ahead to a slew of central-bank meetings this week.

The Fed will announce its latest policy decision Wednesday, and investors expect the central bank to lift U.S. borrowing costs for the first time in a year.

Investors will focus on the Fed’s statements for hints the central bank could raise interest rates more aggressively going forward.

“The greenback’s performance going forward will depend heavily on the extent to which the Fed signals openness to faster policy normalization in 2017 or conversely, signals a continued cautious tone on the U.S. recovery,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

Higher rates typically boost the dollar by making dollar assets more attractive to yield-seeking investors.

The Fed had expected to raise rates multiple times this year but was repeatedly stymied by global market turmoil and weak economic data. Recently, upbeat economic reports and President-elect Donald Trump’s stimulus plans have fueled optimism that the Fed could normalize policy at a faster clip.

The pound was up 0.8% to $1.2675. The Bank of England is scheduled to meet Thursday, but most investors expect the central bank to leave rates unchanged.

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