Oil prices extended their gains on Thursday, driving equities higher in Asian trading. A smaller-than-expected increase in US crude stocks lifted oil prices yesterday. Reports that Russia was prepared to raise output had little impact on the rally as it was outweighed by comments from the head of the International Energy Agency who earlier today said that non-OPEC oil production would see a big fall in 2016.
Crude oil futures surged after the comments following a muted start to the day. US oil futures were up 0.5% at $44.39 in late Asian trading.
Global equities continued to benefit from the higher commodity prices with US indices setting new yearly highs and stocks in Asia also in positive territory on Thursday.
Other commodities also rose, with gold up 1.3% at $1260 an ounce and copper up 0.9% at 2.2420 per pound.
In currency markets, the US dollar was mixed as it was weaker against the yen and the pound but firmer against the euro. The greenback pulled back from a two-week high of 109.88 yen from earlier in Asian trading to ease to 109.63 yen in late session.
It was a similar story versus the pound as sterling dipped to a low of 1.4319 dollars in early Asian session before climbing to 1.4350 dollars. The pound has been boosted in recent days by polls showing the ‘remain’ camp gaining a lead in the Brexit referendum campaign.
The euro meanwhile was stuck near yesterday’s lows versus the dollar. The single currency is likely to remain under pressure ahead of the ECB’s policy meeting later today. The ECB is not expected to announce any changes today but President Mario Draghi may use the press conference to defend his policies following strong criticism from German officials on the central bank's ultra-loose monetary policy. The euro was steady just below 1.13 dollars in late Asian session.
Commodity currencies were mixed on Thursday as the Canadian and Australian dollars were firmer against the greenback on the back of higher commodity prices. But the New Zealand dollar was struggling even after yesterday’s sharp fall. The US dollar was down slightly near 11-month lows at 1.2638 against the loonie, while the Australian dollar was attempting to move back towards 11-month highs at 0.7812 versus the greenback. The kiwi though was stuck around 0.6975.
Looking ahead to the rest of the day, UK retail sales will come in focus before the ECB’s latest policy decision and press conference takes centre stage at 12.30 GMT. In the US session, the latest weekly jobless claims will be eyed along with the Philadelphia Fed manufacturing index.