* Higher oil prices boost Canadian dollar
* Aussie dollar hits 12-day high on rising iron-ore prices
* First net long euro positions since May 2014-IMM data
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, May 15 The Canadian dollar hit its
highest level in over two weeks and the Australian dollar hit a
12-day high on Monday as a bounce in oil prices drove a recovery
in major commodity-linked currencies.
Saudi Arabia and Russia agreed on Monday to extend oil output
cuts until March 2018 to rein in a global crude glut, pushing up
prices by as much as 2 percent and dominating morning trade on
European currency markets.
That gave the Canadian dollar a 0.7 percent lift, hitting
its highest level since April 27, at C$1.3609 per dollar.
With prices of the iron ore it exports also rising,
Australia's dollar hit a 12-day high of $0.7444, up 0.8 percent
on the day, while the New Zealand dollar rose 1 percent to
Weekly positioning data also showed speculators are net long
Australian dollars, which helped it move away from last week's
"The commodity currencies story is quite clear and it's very
much linked around oil (prices)," said Jane Foley, currency
strategist with Rabobank in London.
"There had been quite a large selloff in currencies such as
the Canadian dollar, Australian dollar, and they were probably
quite ripe for some short covering on the news we had from Saudi
and Russia over the weekend."
After quiet trading in morning hours, the euro had risen 0.3
percent by midday to $1.0973, analysts flagging $1.10 as a
potential level for the single currency to cross this week.
Investors appear to have taken a more optimistic view on the
single currency after pro-European Emmanuel Macron's victory in
France's presidential election, with the euro marking its first
net long positioning since early May 2014.
The dollar started the week on the defensive after U.S.
economic data came in shy of expectations and a weekend missile
test by North Korea saw investors buy into the safe haven yen.
The dollar index, which tracks the greenback against a
basket of six major currencies, was 0.3 percent lower on the day
But after slipping versus the yen in Asian trade, the dollar
recovered ground to trade 0.1 percent higher at 113.46 yen
U.S. data on Friday showed a smaller-than-expected 0.4
percent increase in April retail sales from March, while a
disappointing consumer prices report raised concerns for the
retail sector and the broader economy.
The Federal Reserve is widely expected to raise interest
rates at its June meeting and has forecast two more hikes this
year following its a quarter point increase in March. Fed funds
futures are pricing in a 90 percent chance of a rate hike in
June, according to the CME's Fedwatch tool.
Kathleen Brooks, research director at CityIndex noted U.S.
rate hike expectations appear to be "barrelling ahead" of
economic data and the dollar.
"This suggests that the Fed may normalise interest rates
even if the economic data goes through a rough patch. It also
suggests that the prospect of rate hikes to bring interest rates
back to a normal level may not lead to a surge in the buck," she
wrote in a note.
(Editing by Alexander Smith and Pritha Sarkar)