Oil prices plunged in the wake of an agreement between major world leaders and the Iranian government which provides Iran with the lifting of certain earlier imposed sanctions. In exchange, Tehran will agree to put the brakes on its controversial nuclear program. With the fall in oil prices, oil-linked currencies such as the Canadian Dollar and the Norwegian Krone came under some pressure. In fact, the Canadian Dollar hit a 4-month trough against the greenback.
As reported at 11:25 am (BDT) in London, the USD/CAD was trading at C$1.2802, a gain of 0.47% and a single pip from the session high; the pair ranged from C$1.2733 at the low end to C$1.2803 at the high. Under volatile conditions, the USD/NOK was higher at 8.1575 Norwegian Krone, a gain of 0.91%, well off the session peak of 8.1649 Norwegian Krone.
US Policy under Scrutiny
Markets will be putting US monetary policy under the microscope again today. Janet Yellen, the Chairman of the US Federal Reserve Bank, prepares to begin her last day of testimony before the US Congress. With that testimony, analysts believe that the stage is being set for a growing divergence between US monetary policy and that of the majority of the rest of the world. Of course, nowhere is that divergence more apparent than in the Eurozone. Mario Draghi and the ECB have little choice but to continue with the existing ultra loose policy in an effort to propel some growth in the Euro area.