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Doha failure sees Loonie, Aussie slide; Yen near 1 1/2-year high

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The Canadian and Australian dollars dropped as crude oil tumbled after oil-producing nations failed to reach an accord to freeze output.

[NEW YORK]The Canadian and Australian dollars dropped as crude oil tumbled after oil-producing nations failed to reach an accord to freeze output. The yen, used by investors as a haven, rose toward a 17-month high.

The currencies of Australia, Canada, New Zealand and Norway all retreated at least 0.5 per cent after negotiations in Doha ended without an agreement from Opec and other oil producers to freeze supplies. 

Foreign-exchange traders sought the safety of Japan's currency as the diplomatic failure threatens to send crude back toward the more than 13-year lows reached in February. World leaders at the end of last week signaled opposition to any efforts from Japan to directly halt the yen's 11 per cent climb this year.

"The failure of the Doha talks to agree anything serves to underscore the ongoing global supply/demand imbalance," Ray Attrill, co-head of currency strategy at National Australia Bank Ltd in Sydney, wrote Monday in a note to clients.

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"If non-oil hard commodity prices follow oil down this morning, expect more weakness over the course of the day" for currencies linked to resource exports, he wrote.

The Australian dollar dropped 1.2 per cent to 76.33 US cents as of 8:50 am Tokyo time, set for the largest decline since April 7. The Canadian dollar fell 1.2 per cent to C$1.2983 per US dollar. Crude is the nation's second-largest export.

Futures for West Texas Intermediate and Brent crude tumbled more than 6 per cent as markets opened.

The lack of agreement at Doha highlights the deep divisions between Opec members, and importantly, within Saudi Arabia, said Robert Rennie, the global head of currency and commodity strategy at Westpac Banking Corp in Sydney. The Aussie should hold support from about 75.75 cents to 76 cents at least through the next day or so, he said.

The yen added 0.6 per cent to 108.13 per US dollar, and touched 107.77. It reached 107.63 on April 11, the strongest since Oct 2014.

Hedge funds and other large speculators pushed wagers on yen strength to a record last week as Japanese authorities appears reluctant to intervene to reverse the strengthening currency.

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