U.S. Session Forex Recap – Apr. 7, 2016

  • Canadian Ivey PMI fell from 53.4 to 50.1 vs. 54.9 forecast
  • U.S. crude oil inventories dropped by 4.9 million barrels
  • FOMC minutes: Two members voted to hike rates in March
  • Fed policymakers highlighted strength in hiring and housing
  • FOMC officials wary of global economic slowdown
  • FOMC officials had mixed views on inflation

The Greenback weakened against its forex peers even though the FOMC minutes revealed that a couple of policymakers wanted to hike rates right there and then.

Major Events:

FOMC minutes – Even though the Fed decided to sit on its hands during its March policy statement, the transcript of their huddle revealed that two members of the committee actually voted for a 0.25% rate hike. In fact, the minutes weren’t as downbeat as expected, with some policymakers even reiterating that the U.S. has been resilient despite the downturn in global economic performance.

In addition, most FOMC members highlighted the progress in hiring and housing. Some mentioned that the inflation trend was firming while others worried that it might not be sustained. Because of that, majority of the committee members insisted that it would be prudent to wait for the next batch of data points before making any tightening moves.

Another crude oil rally – Commodity prices chalked up another day in the green, as crude oil got a boost from a reduction in U.S. stockpiles. Crude oil inventories fell by 4.9 million barrels, mirroring the API data released yesterday.

WTI crude oil jumped from below $37/barrel to a high of $37.91/barrel while Brent crude oil rallied from $38.50/barrel to a high of $39.90/barrel. In addition, rumors that OPEC members seem more amenable to freezing output levels for their April 17 meeting also kept crude oil supported.

Major Currency Movers:

USD – The Greenback was weighed down by the pickup in risk appetite, spurred mostly by the rally in crude oil.

EUR/USD rallied to a high of 1.4130 before retreating below 1.1400 once more, GBP/USD popped up to a high of 1.4168 after coming close to the 1.4000 handle, USD/JPY broke below its short-term range to a low of 109.31, and USD/CHF is down to the .9550 minor psychological mark.

CAD The Loonie drew support from renewed hopes of an oil production cap ahead of the OPEC meetings, as well as the decline in U.S. stockpiles.

USD/CAD fell from a high of 1.3185 to a low of 1.3060, CAD/JPY bounced off the 83.50 minor psychological support to 83.85, GBP/CAD found resistance at 1.8550 then dropped to a low of 1.8473, and EUR/CAD is down to the 1.4900 levels.

Watch Out For:

  • 12:30 am GMT: Australia AIG construction index (46.1 previous)
  • 1:30 am GMT: BOJ Governor Kuroda’s testimony

See also:

Asian Session Recap

London Session Recap

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