U.S. Session Forex Recap – Apr. 6, 2016

  • U.S. ISM non-manu PMI up from 53.4 to 54.5 vs. 54.1 forecast
  • U.S. trade deficit widened from $45.9B to $47.1B vs. $46.3B estimate
  • Canadian trade deficit grew from 0.6B CAD to 1.9B CAD
  • Canada’s exports down by 5.4% in Feb, imports down 2.6%
  • API: Crude oil inventories down by 4.3 million barrels
  • New Zealand GDT auction dairy prices up by 2.1%

Another day, another mixed performance! The U.S. dollar was all over the place, as the forex majors were driven by country-specific events.

Major Events:

Mixed U.S. data – You win some, you lose some. While the ISM non-manufacturing PMI turned out better than expected with a rise from 53.4 to 54.5, the U.S. trade balance fell short of expectations and showed a wider deficit of $45.9 billion compared to the previous $47.1 billion shortfall.

However, components of the trade balance indicated that exports posted solid gains led by food, automobiles and parts, and consumer goods. This marks the first time that export activity came in the green since September last year. Imports also picked up by 1.3% in February, reflecting higher domestic demand.

Downbeat Canadian trade figures – Canada’s trade balance painted a different story from that of the U.S. as it was spurred by declines in both imports and exports. The trade deficit widened from 0.6 billion CAD to 1.9 billion CAD in February instead of showing the projected 0.9 billion CAD surplus.

The report components reveal that exports slipped 5.4% during the month due to falling prices and volumes. Shipments of energy products were down 14.4%, marking their eighth consecutive monthly decline, led mostly by – surprise, surprise – crude oil. Meanwhile, the drop in imports was also spurred by a 29.7% tumble in energy products.

Pickup in commodity prices – There were some green shoots on the commodities front, though, as the American Petroleum Institute reported a DECREASE of 4.3 million barrels in crude oil stockpiles. Now that’s a bit of a surprise since market watchers have been used to seeing a buildup in inventories!

WTI crude oil found support around the $35/barrel mark and recovered to $36.65 while Brent crude oil rallied off its $37.50 lows to $38.40. In New Zealand, the recently concluded Global Dairy Trade auction yielded a 2.1% rebound in prices from the earlier 2.9% slide.

Major Currency Movers:

Commodity currencies – The comdoll gang had quite a bit of a U-turn during the day, as they started off getting dragged lower by risk aversion before making a decent comeback.

USD/CAD reached a high of 1.3217 before retreating to 1.3150, AUD/USD dipped to a low of .7509 then recovered to .7545, NZD/USD bounced from a low of .6757 back to the .6800 handle. CAD/JPY found support at the 83.50 minor psychological level, AUD/JPY bounced off the 83.00 handle, and NZD/JPY pulled back up to 75.00.

Watch Out For:

  • 2:45 am GMT: Chinese Caixin services PMI (51.4 expected, 51.2 previous)
  • 6:00 am GMT: Japanese leading indicators (99.9% expected, 101.8% previous)

See also:

Asian Session Recap

London Session Recap

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