U.S. Session Forex Recap – Feb. 11, 2016

  • Yellen: Fed is watching global markets carefully
  • Yellen: Not sure if negative interest rates are legal
  • Yellen: Tightening path depends on market developments
  • U.S. crude oil inventories down by 0.8 million barrels

Rally and reverse! The Greenback was off to a pretty good start but it eventually returned its recent gains to its forex peers. What’s that all about?

Major Events:

Fed head Yellen’s speech – Most forex junkies had been waiting expectantly for Yellen’s speech but were a bit disappointment to find out that the Fed head honcho didn’t offer strong clues on what the U.S. central bank has up its sleeve. She did say that Fed officials are watching global markets carefully and that the equity selloff might weigh on U.S. economic performance.

When it comes to the question of negative interest rates, which seems to be the in-thing for some central banks, Yellen admitted that she’s unsure if the Fed can legally use that tool. Even though didn’t exactly douse March rate hike hopes, she also explained that the tightening path depends on how the market turmoil unfolds.

Drop in oil supply, drop in oil prices – The U.S. crude oil inventories report from the Energy Information Administration showed a positive surprise, as stockpiles reportedly fell by 0.8 million barrels instead of rising by the estimated 3.1 million barrels. WTI crude oil shrugged this off, though, and fell to $26.90/barrel while Brent crude oil dipped to $30.55/barrel.

As it turns out, other oil-related headlines appear to be running the show, with reports of large oil companies feeling the pinch resulting to a very downbeat outlook on the entire energy industry.

Major Currency Movers:

USD – It was all about Yellen in yesterday’s U.S. trading session, as dollar pairs reacted quickly to her statements.

USD/JPY had a brief rally but soon resumed its drop to a low of 112.67, EUR/USD initially dipped to a low of 1.1161 then climbed back to 1.1324, GBP/USD rallied to a high of 1.4578, and AUD/USD bounced back up to the .7100 area.

JPY – While most forex traders were focusing on the dollar, the Japanese yen was able to sneak in a few more gains while markets didn’t seem so hungry for more risk.

EUR/JPY went on to drop below the 128.00 handle to a low of 127.57, GBP/JPY pulled up to the 167.50 area before falling to a low of 164.26, CAD/JPY broke below consolidation to reach a low of 81.13, and NZD/JPY is testing support at the 75.50 minor psychological mark.

Watch Out For:

  • 12:00 am GMT: Australia’s MI inflation expectations (3.6% previous)

See more:

Asian Session Recap

London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!