Commodity currencies lead gains this week

Singapore - Currencies of commodity-exporting nations such as Norway and Canada led gains this week as oil headed for the biggest weekly advance since April amid speculation the Federal Reserve will be slow to raise interest rates.

The krone and loonie have risen the most among developed-market peers since August 5 as oil extended its rebound after slipping into a bear market earlier this month.

Record highs for US stock markets on Thursday signal a revival in risk appetite that has buoyed higher-yielding currencies such as the Aussie and kiwi.

A gauge of the dollar has erased all its advance from last week, after better-than-forecast payrolls growth failed to lift bets for higher US rates by year-end above 50%.

"The strong risk appetite and relentless hunt for yield will see relatively high-yielding currencies stay in demand," said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore.

"The US dollar will likely stay soft in an environment where risk-seeking behaviour is strong."

The krone rose 0.2% to 8.2375 per dollar as of 6:31 a.m. in London from Thursday, taking its weekly advance to 3.3%. The loonie added 0.2% to C$1.2974 versus its US peer, climbing 1.5% since August 5.

Over the past week, Australia’s dollar has risen 0.9% to 76.88 US cents, while the kiwi has strengthened 0.8% to 72 US cents.

The Aussie and kiwi slipped at least 0.1% on Friday as data from China, the South Pacific nations’ biggest trading partner, showed factory output, retail sales and investment slowed.

While the data were "disappointing," the Aussie is unlikely to weaken below 76 cents as "global demand for the Australian dollar is still strong," said Imre Speizer, a market strategist at Westpac Banking Corporation in Auckland.

The Bloomberg Dollar Spot Index has declined 0.6% this week, while the greenback slipped 0.5% to $1.1140 per euro and gained 0.2% to ¥102.01.

“Ultimately, we’re still trading in the middle of the range,” said Sue Trinh, Royal Bank of Canada’s Hong Kong-based head of Asian foreign-exchange strategy. “The market seems a bit beat up” due to choppy trading, she said.

West Texas Intermediate for September delivery has jumped 5.1% this week to $43.95. Talks with oil producers in Algiers next month could include action to stabilize the market, Saudi Arabia’s energy minister said, according to Reuters.

Futures signal 49% probability the Fed will raise rates by year-end, according to data compiled by Bloomberg.