Turmoil gripped global foreign exchange markets on Tuesday, driving investors to the safety of the yen and the Swiss franc as Russia's rouble went into a tailspin and oil prices fell below $60 a barrel.
The big loser among actively traded G-10 currencies was oil-rich Norway's crown. It fell to its lowest in more than a decade against the dollar and dropped below parity against its Swedish counterpart for the first time in almost 15 years.
Volatility gripped currency markets a day after the Russian central bank hiked interest rates 650 basis points to 17 percent to halt a collapse in the rouble. The effort failed, and the rouble hit a record low above 80 to the dollar.
Capital flight out of energy-related assets showed little sign of abating, with U.S. crude futures hitting a fresh 5 1/2-year low.
"It is contagion from Russia. Anything related to oil is being sold off," said Carl Hammer, chief currency strategist, at SEB, Stockholm.
"Long-term investors are waking to the fact that oil will probably stay low for quite some time and they are liquidating their positions."
The Norwegian crown skidded almost 4 percent to 0.9800 Swedish crowns, its weakest since 1992. It hit an 11-year low at 7.6533 to the dollar and was on track for its biggest drop in more than two decades.
Analysts say a deeper economic contraction in Russia will hurt global growth, especially in Europe. Adding to the anxiety is the U.S. Federal Reserve's two-day policy meeting starting later in the day, which could open the door for rate hikes in mid-2015.
Those worries supported safe-haven currencies like the yen and the Swiss franc. Both tend to strengthen at times of economic and financial market stress as they are often used as a funding currency for investments in riskier assets.
The yen rose nearly 1.8 percent at one points to as high as 115.56 to the dollar, its highest in a month. The Swiss franc hit 1.20085 francs per euro, near its highest since September 2012.
"Clearly the Russian situation is having an impact. The emergency rate hike shows that the benign impact from the drop in oil prices is perhaps running out. Investments could be hurt and all those currencies which are exposed to oil and funded in the dollar are being unwound," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
Traders say the fate of the rouble - and of many other commodity currencies - rests on oil. Plunging oil prices are hurting the Canadian dollar which slid to five-year lows of C$1.1674 to the U.S. dollar in early Asian trade.
Most investors were also cautious as the Fed looked set to debate whether to change its policy statement to indicate it is moving a step closer to rate hikes next year.
The euro, also seen as a safe haven, rose to a three-week high of $1.2570. It was helped by data that showed euro zone businesses were in slightly better shape in December than expected and better-than-expected German ZEW survey.
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.