U.S. Session Forex Recap – Jan. 12, 2016

  • U.S. labor market conditions index improved from 2.7 to 2.9
  • Fed official Lockhart: March rate hike unlikely
  • Japanese current account surplus shrank from 1.49T to 1.42T JPY
  • New Zealand ANZ commodity prices down by 1.8% in Dec
  • WTI crude oil ended at $31.41/barrel

The Greenback returned a handful of its recent wins to most of its forex peers but not because of a pickup in risk appetite.

Major Events:

Lockhart downplays March hike – Last week’s upbeat non-farm payrolls release may have revived hopes of another Fed interest rate hike by March, but central banker Dennis Lockhart cautioned that a few more weeks of stock market declines could wind up derailing the ongoing recovery.

In addition, Lockhart said that FOMC members would need more deets on inflation levels before deciding to tighten monetary policy again. He explained that inflation trends would be crucial to the next Fed rate hikes and that policymakers would like to see stronger evidence that the 2% target would be reached.

Interestingly enough, these remarks managed to keep stock indices slightly afloat, as investors and companies found comfort in the idea that borrowing costs might not increase too much anytime soon. The Dow 30 index closed 0.32% higher while the S&P 500 index chalked up a 0.09% bounce.

More crude oil declines – The bleeding ain’t over yet, forex folks! WTI crude oil dipped to new lows around $31.25/barrel before closing at $31.41/barrel during the U.S. session, driving the Canadian dollar to 12-year lows against the U.S. dollar. Brent crude oil fell to $31.54/barrel, its lowest point since 2004.

Major Currency Movers:

CAD – Thanks to yet another slide in crude oil, the Canadian dollar was down in the dumps once more, sliding to fresh record lows against the Greenback.

USD/CAD broke past the 1.4200 major psychological barrier to a high of 1.4244, CAD/JPY tumbled below the 83.00 mark to a low of 82.22, EUR/CAD popped above the 1.5500 mark to a high of 1.5513, and GBP/CAD enjoyed a brief stay above the 2.0700 handle and reached a high of 2.0739.

USD – Lockhart’s remarks and a bit of a rebound in the U.S. stock market spurred a bit of a reversal in the dollar’s latest moves, allowing some forex traders to book profits off their recent positions.

USD/JPY took a break from its selloff and is climbing close to the 118.00 handle, EUR/USD showed signs of resuming its drop after falling back below the 1.0900 mark, USD/CHF rebounded back above parity and is currently at 1.0023, and AUD/USD bounced off a low of .6925 to close in on the .7000 level.

Watch Out For:

  • 5:00 am GMT: Japanese consumer confidence index (42.3 expected, 42.6 previous)
  • 5:00 am GMT: Japanese Economy Watchers sentiment index (46.7 expected, 46.1 previous)

See more:

Asian Session Recap

London Session Recap

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