U.S. Session Forex Recap – Feb. 17, 2016

  • Empire State manu index up from -19.4 to -16.6, short of -10.5 forecast
  • Canadian manufacturing sales up by 1.2% vs. 0.9% expected
  • New Zealand GDT dairy index down by 2.8%, -7.4% previous
  • Japanese core machinery orders up by 4.2% y/y vs. 4.6% forecast

Consolidation is the name of the game for U.S. forex traders! Even though equity investors pushed for gains, higher-yielding currencies and commodities lagged behind.

Major Events:

Russia-OPEC meeting – Crude oil prices had been gaining ground on expectations that the Russia-OPEC meeting yesterday would produce an deal on production cuts. Venezuela, Kuwait, and Qatar pledged to freeze output levels and even convinced kingpin Saudi Arabia and Russia to do so, but only if other oil-producing nations also join in.

WTI crude oil wasn’t so impressed with these results, as price slipped back below the $30/barrel level to $29.30, and Brent crude oil fell to $32.60/barrel. For today, energy officials are set to fly to Iran to convince their leaders to participate in this proposed production freeze, although the odds are looking slim because this country just pledged to ramp up production with their recent return to the oil export market.

U.S. equities close higher – U.S. traders seem to be in the mood for more risk after enjoying the President’s Day holiday, allowing equity indices to close in the green. The S&P 500 index logged in a 1.65% gain while the Nasdaq ended 2.27% higher. This positive outlook carried over to most dollar and yen pairs, which erased some of their losses from the previous session.

New Zealand dairy auction – A few hours ago, New Zealand held its bi-weekly Global Dairy Trade auction and yielded yet another drop in prices. The index fell by 2.8%, marking its fourth consecutive drop and indicating that the slump in the industry ain’t over. Keep in mind that dairy products account for more than 25% of New Zealand’s export industry so this downturn in prices can’t be good for revenues and overall economic growth.

Major Currency Movers:

JPY – The lower-yielding Japanese currency returned some of its recent wins to its forex peers, as profit-taking took place at the start of the U.S. session.

USD/JPY bounced from 113.64 to a high of 114.40, EUR/JPY drew support around 126.70 to land back above 127.00, GBP/JPY rallied from an intraday low of 162.45 to a high of 163.56, and AUD/JPY bounced off the 80.50 mark.

CAD – The oil-related Loonie was generally weaker throughout the day, unable to benefit from the small risk rallies that took place.

USD/CAD reached a high of 1.3912 before cruising sideways, CAD/JPY dipped to a low of 81.70, EUR/CAD popped up to a high of 1.5510 then consolidated, and GBP/CAD spiked to a high of 2.0037 before retreating below the 1.9900 handle.

See also:

Asian Session Recap

London Session Recap

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