The oil price jumped last night on the back of reports that Libyan exports are now close to zero. Coming on the back of decent Chinese economic data, shorts were forced to cover and we ended the day with an almost 2% price rise.
The traditional oil-proxy trade in the FX market is the Yen, as the Japanese economy is so overwhelmingly reliant on oil imports. GBP, NOK and CAD are currencies which tend to be positively influenced by oil price rises whereas the Yen is generally adversely affected by such a rise.
I’m not an expert on the oil market and we may simply be seeing a one-off stop-driven event, but if we do start seeing a trend in the crude market, then looking for dip-buying opportunities in some of these Yen crosses does make good sense.