U.S. Session Forex Recap – May 4, 2016

  • Fed official Lockhart: Brexit concerns could delay rate hike
  • New Zealand dairy prices down by 1.4%
  • Employment up by 1.2% in New Zealand for Q1 vs. 0.6% forecast
  • New Zealand jobless rate up from 5.4% to 5.7% in Q1
  • WTI crude oil down more than 2% below $44/barrel

With no major U.S. reports on deck, the Greenback grabbed the opportunity to regain a bit of lost ground against its forex counterparts, especially the commodity currencies.

Major Events:

Fed official Lockhart’s testimony – Forex junkies seem to be pricing against a potential June rate hike, and Fed official Dennis Lockhart confirmed that global uncertainty could continue to prevent the U.S. central bank from tightening in June. In particular, he explained that Brexit concerns ahead of the actual referendum then (June 23) could convince the FOMC to sit on its hands during their policy meeting (June 14-15).

New Zealand dairy auction and jobs release – Data from New Zealand is looking as mixed as the reactions to the latest Game of Thrones episode. The Global Dairy Trade auction yielded a 1.4% decline in dairy prices, capping off the positive streak seen in the past couple of auctions and suggesting that the industry’s troubles ain’t over.

Meanwhile, the quarterly jobs report printed a stronger than expected headline increase of 1.2% for Q1, twice as much as the projected 0.6% gain. However, the unemployment rate rose to 5.7% versus the estimated 5.5% reading for Q1 while the previous quarter’s figure was revised from 5.3% to 5.4%. Components of the report indicated that this was mostly a result of an increase in the working-age population.

On a less downbeat note, the labor cost index posted a 0.4% gain for the period, outpacing the consensus of a 0.3% uptick. This brings annual wage inflation up to 1.6%, with private sector wage growth up 1.8% and the public sector’s up by 1.4%.

Major Currency Movers:

USD – The Greenback made a pretty good comeback in the latest New York trading session, as traders likely booked profits off their short positions.

USD/JPY bounced off a low of 105.55 then pulled up to a high of 107.47, EUR/USD topped at 1.1617 and is retreating to the 1.1500 handle, GBP/USD dropped from a high of 1.4770 to the 1.4550 minor psychological support, and USD/CHF rallied from a low of .9445 to a high of .9554.

Commodity currencies – The comdoll gang took plenty of hits from the dollar in the past few hours but managed to make some gains against the Japanese yen.

AUD/USD resumed its slide to the .7500 handle after a quick pullback earlier in the day, NZD/USD fell to a low of .6913 then bounced to .6938, and USD/CAD surged to a high of 1.2732 after consolidating below 1.2500. AUD/JPY pulled up to a high of 80.38, NZD/JPY climbed back above the 74.00 mark, and CAD/JPY is holding steady at 84.00.

Watch Out For:

  • Japanese banks closed in observance of Greenery Day
  • 1:00 am GMT: New Zealand ANZ commodity prices (-1.3% previous)

See also:

Asian Session Recap

London Session Recap

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