3 Min Read
* Dollar rallies 1 percent vs safe-haven yen
* Commodity currencies benefit from OPEC output cut deal
* Questions remain on how to cut production
* German inflation data eyed
By Jemima Kelly
LONDON, Sept 29 (Reuters) - The dollar rose 1 percent against the safe-haven yen on Thursday to hit an eight-day high as investors moved into riskier assets following an OPEC deal to cut oil output.
The Organization of the Petroleum Exporting Countries said it would reduce output to a range of 32.5 million-33.0 million barrels per day, a reduction of 0.7-2.2 percent, and the first such deal since 2008.
The currencies of oil-exporting countries such as Canada and Norway surged after the deal late on Wednesday, but were all slightly down on Thursday, mirroring a dip in oil prices, as markets grew more sceptical on how OPEC would implement the planned output cut.
Both currencies were still, however, trading more than 1 percent higher than their levels before the oil deal was announced by 0720 GMT. The Norwegian crown was a clear winner, hitting a 14-month high of 9.00 per euro.
The dollar jumped as much as 1.1 percent to 101.75 yen , its strongest since Sept. 21.
"Everything you're seeing today is a response to the move in crude and the possible coordination necessary for OPEC to do what it has announced," said BMO Capital Markets currency strategist Stephen Gallo, in London.
"The environment for the dollar is still broadly supportive - the Fed is still the only central bank that looks set to raise interest rates... At a time like this you tiptoe back into yield, you tiptoe back into carry," he added, referring to the practice of borrowing a low-yielding, low-risk currency and selling it to buy a riskier one with a higher return.
The Australian dollar also hit a three-week high of $0.7711 - the country exports various natural resources even though it is a net importer of oil - but was down 0.3 percent by 0720 GMT.
Some analysts cautioned that the oil-cut deal is leaving crucial details on how much each country will produce to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
"It could be that everyone is thinking that they don't have to cut output themselves," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
"I think the markets are still not fully convinced."
The euro was little changed at $1.1224, with investors eyeing German inflation data due at 1200 GMT.
For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Hideyuki Sano in Tokyo; Editing by Angus MacSwan)