U.S. Session Forex Recap – Apr. 20, 2016

  • U.S. building permits down from 1.18M to 1.09M vs. 1.20M forecast
  • U.S. housing starts down from 1.19M to 1.09M vs. 1.17M forecast
  • BOE Gov Carney cautioned about risks of a Brexit
  • Kuwait oil strike over, production resumed
  • American Petroleum Institute reported increase of 3.1M barrels in oil stockpiles
  • New Zealand dairy prices up by 3.8% in latest GDT auction

Traders showed no love for the dollar yet again, moving more funds into higher-yielding commodity currencies.

Major Events:

Oil holds steady despite supply gains – Crude oil production will soon be back to normal in Kuwait, as oil industry employees ended a three-day strike that cut their output by more than half. As it turns out, the country’s oil minister said that the government would rule out negotiations with the workers until they stopped their protests against pay cuts and reduced benefits.

Meanwhile, the American Petroleum Institute reported a buildup of 3.1 million barrels in crude oil stockpiles. WTI crude oil popped up to the $42/barrel level before retreating to $41.76/barrel while Brent crude oil turned upon hitting a high of $44.46/barrel.

Testimonies from central bank heads – RBA Governor Stevens, BOE Governor Carney, and BOC Governor Poloz all gave speeches during the U.S. trading session, spurring additional volatility from their respective currencies.

In contrast to the slight jawboning seen during the RBA statement and minutes, head honcho Stevens reiterated in his testimony that “central banks should target growth, not exchange rates.” He gave China the thumbs up for their supportive macro policies and for making progress in domestic growth.

As for BOE Governor Carney, he emphasized his anti-Brexit bias, echoing the sentiments of U.K. Chancellor George Osborne. He explained that exiting the EU would make funding their current account deficit more expensive but that a big shock in China could pose a bigger risk than a Brexit.

BOC Governor Poloz simply repeated some of the statements made during their official policy decision, citing that Canada’s strong Q1 growth was merely a result of temporary factors. Still, during his Q&A, he mentioned that he doesn’t see the need for actual quantitative easing yet.

Major Currency Movers:

USD The U.S. dollar chalked up another losing day to its rivals, although a bit of profit-taking was seen towards the end of the session.

EUR/USD advanced to a high of 1.1385 before retreating to 1.1350, GBP/USD climbed to a high of 1.1419 then consolidated, USD/JPY is testing support at the 109.00 handle, and USD/CHF dipped to a low of .9586.

NZD – The Kiwi was one of the biggest winners for the day, drawing support from another increase in dairy prices during the recent GDT auction.

NZD/USD rallied past the resistance at .7000 to a high of .7047, NZD/JPY is up to the 77.00 levels, EUR/NZD is testing support at the 1.6200 handle, and GBP/NZD dipped to a low of 2.0363.

Watch Out For:

  • 12:30 am GMT: Australia MI leading index

See also:

Asian Session Recap

London Session Recap

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